The Nifty IT index took a hit on February 19, slipping over 1% in early trade as Indian IT heavyweights like TCS, Infosys, and Tech Mahindra reacted to weak earnings from Capgemini.
The French IT consulting giant reported a 2% decline in annual constant currency sales, sparking concerns across global markets. But is this a sign of a broader slowdown, or are Indian IT firms better positioned to weather the storm? Let’s break it down.
Also read: Nifty Pharma index drops 3% on Trump’s tariff threat
Capgemini’s earnings impact on the Nifty IT index
Capgemini’s latest earnings report wasn’t entirely unexpected, but its cautious outlook for 2025 has rattled investors. The company reported:
| Metric | Capgemini’s performance |
| Annual revenue growth (2024) | -2% in constant currency |
| 2025 sales outlook | -2% to +2% growth |
| Operating margin projection | 13.3% – 13.5% |
| Share price impact | -10.22% in a single session |
Following this, the Nifty IT index dipped over 1% in intra-day trade to 40,785, with nine out of ten index constituents in the red. By mid-morning, the index had recovered slightly, trading 0.36% lower at 41,313.15.
Major IT stocks reaction
The weak Capgemini results triggered a wave of selling across Indian IT stocks. Here’s how the top players fared:
| Stock | % Change |
| LTIMindtree | -2.8% (Day’s low: ₹5,511) |
| TCS | -2% |
| Infosys | -1.7% |
| Tech Mahindra | -0.55% |
While stocks like Mphasis, Wipro, Coforge, and Persistent Systems gained up to 1.7%, most major IT firms saw declines, reflecting investor caution.
You may also read: ABB Share Price Soars 5% After 54% Net Profit Growth
Trump tariffs add pressure on Indian IT stocks
Adding to the woes, IT stocks also faced pressure from potential US tariff policies. On February 13, former US President Donald Trump announced plans for reciprocal tariffs aimed at reducing the US trade deficit. This could have a direct impact on India’s export-driven IT industry, which relies heavily on US clients.
The uncertainty surrounding these tariffs caused further declines:
| Stock | Drop % |
| LTIMindtree | -3.46% (trading at ₹5,472) |
| TCS | -2.63% (trading at ₹3,771, near its 52-week low) |
| Infosys | -2% (trading at ₹1,816) |
Infosys, in particular, is now down over 9% from its 52-week high of ₹2,006, recorded in December 2023.
The decline in IT stocks, combined with mixed global cues and concerns over US Federal Reserve policies, weighed on market sentiment. Notably, the upcoming FOMC meeting minutes are expected to reflect a hawkish stance, potentially delaying interest rate cuts in the US.
Also read: Gillette India Shares surge 14% after Q3 Results
What’s next for Indian IT stocks?
While the near-term outlook for Indian IT stocks remains uncertain due to Capgemini’s weak guidance and US tariff concerns, long-term fundamentals remain strong. Demand in North America, particularly in financial services, is expected to drive growth. Investors should watch for:
- The impact of US tariff policies on IT exports.
- Federal Reserve’s interest rate decisions.
- Earnings trends from Indian IT majors in the upcoming quarters.
For now, while the market may be jittery, long-term investors in Indian IT stocks should assess the sector’s fundamentals before making any investment decisions.
