IT stocks have seen a sharp downturn this year so far, with multiple headwinds leading to the shares of Infosys, Tata Consultancy Services (TCS), HCL Technologies, Tech Mahindra and Wipro crashing up to 36% in 2026 so far. The combined market capitalisation of all these top five IT companies at the end of the trading session on Friday stood at a little over Rs 18.12 lakh crore.
Shares of Reliance Industries, India’s most valuable company, have also declined 17% this year so far amid a volatile energy market following the outbreak of the Iran and US war earlier this year. The stock last month crashed to a 52-week low of Rs 1,253.20 apiece on NSE, before paring some gains. At the end of Friday, RIL’s market capitalisation stood at nearly Rs 18 lakh crore.
Why IT stocks are falling?
RIL currently commands a market cap more than twice of TCS, India’s largest IT company. This comes as the AI worries led correction in IT stocks outpaced. Earlier this year, the sector witnessed a sharp selloff after breakthroughs by AI startups fuelled concerns about potential disruption to the traditional IT services business model. While intermittent buying emerged on hopes that fears of an AI-led shake-up were overdone, the recovery continues with analysts raising doubts over how long it will last.While doomsday prophets continue to debate the future of IT companies following fresh AI advancements, Nomura believes the long-term addressable market for Indian IT companies will continue to expand. In its latest note, the brokerage said Indian IT services firms, especially large-cap players, are facing a “perfect storm of two key headwinds”.
The first is macro uncertainty stemming from geopolitical tensions in the Middle East and the outlook for interest rates, particularly in the US, which is keeping client spending subdued at the margin.Nomura also noted that when clients’ technology spending is not growing, competition among IT services companies intensifies, with the economic gains from AI being passed on to customers. With firms such as Accenture indicating that the impact of the conflict on growth could persist in the near term, the brokerage expects FY27 to remain another subdued year for the sector.Also read: Nomura expects IT firms to see ‘anaemic’ growth in FY27. Here are latest target prices for Infosys, TCS, and others
Reliance Industries share price
Reliance Industries (RIL) shares recorded marginal gains to close at Rs 1,304 apiece on Friday. At its annual general meeting (AGM) last month, billionaire Mukesh Ambani announced that Jio Platforms’ board had approved the draft red herring prospectus (DRHP) for its IPO, formally setting in motion one of India’s most anticipated public offerings. The IPO will comprise a fresh issue of 27 crore shares, with Reliance planning to use Rs 27,500 crore of the proceeds to repay debt, while the balance will be allocated towards general corporate purposes. The size of the mega IPO could be around Rs 35,00-40,000 crore.Nuvama Institutional Equities noted that although Jio is likely to receive a premium valuation in public markets, gains for Reliance shareholders may be limited because the telecom business sits within a larger conglomerate structure. The brokerage continues to apply a 20% holding company discount while valuing Reliance’s digital and retail businesses, reflecting the market’s tendency to value subsidiaries more richly than their parent companies.Also read: Rs 35,000 crore Jio IPO may not be a jackpot for Reliance investors. Here’s why
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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