It Stock Analysis / Is recession coming? 10 IT companies lost Rs 88,000 due to these 6 reasons

It Stock Analysis: The stock market is witnessing continuous fluctuations. If we look at the data, the fear of recession is clearly visible on the faces of investors. Especially if we talk about IT stocks, they have fallen by 16% to 33% from their peak. Due to this decline, the total valuation of the top 10 IT companies of the country has declined by Rs 88,000 crore. Eight of the top 10 IT stocks are in the grip of recession, including Infosys, HCL Tech and Tech Mahindra. LTIMindtree has suffered the biggest blow, falling 34%, while Wipro has performed the best, but it is also down 16%.

On Thursday, the stock market fell for the 5th consecutive day. Nifty is down about 15% from its peak, while the Sensex has also fallen by more than 13%. Although, in the month of March, the Sensex saw a rise of 630.81 points, but looking at the current circumstances, it seems that the Sensex and Nifty may see a decline for the sixth consecutive month.

Major reasons for the decline in the shares of IT companies

Fear of recession in America: The possible recession in the US is affecting the global markets. The tariff policies of the US administration and economic instability have worried investors. According to JP Morgan, the possibility of recession in the US has increased to about 40%, which may have a negative impact on Indian IT companies.

Weak revenue growth forecast: Global brokerage firm Morgan Stanley has reduced the revenue growth forecast in US dollars for Indian IT companies. It is expected to be only 4.5% in FY 2026 and 6% in FY 2027. Due to this, uncertainty has increased among investors.

Threat of AI: The development of Generative AI (GenAI) is posing new challenges for the IT service industry. Investors are concerned that the increasing use of AI may reduce the demand for traditional IT services, which may slow down the growth of Indian IT companies.

Concerns about valuation: Nifty IT's P/E ratio is still 37% higher than the Nifty average. According to Motilal Oswal, despite the recent decline, the valuations of IT companies still remain expensive, making investors cautious.

Federal Reserve interest rates: The chances of interest rate cuts in the US are low, adding to the troubles of Indian IT companies. Due to high interest rates, investors are moving towards safe assets, affecting the equity market.

Is this the right time for investors?

The current phase of slowdown in the IT sector is a matter of concern for investors, but in the long term, this sector still remains strong. For investors who are thinking of long-term gains, this could be an opportunity. However, short-term investors need to be cautious as the market may see further decline.

Conclusion

The current decline in the IT sector is mainly due to global economic uncertainties, fears of a US recession, and the impact of technological innovations. However, the sector may recover in the long term. Investors need to be cautious and make informed decisions so that they can make profits even in this volatility.