Mphasis, Infosys, IT Stocks Drop Up To 4% Amid Tariff Uncertainty; Know Analysts' Take
Major Indian IT services companies faced selling pressure in early trade on Tuesday, as concerns over US reciprocal tariffs weighed on investor sentiment
Major Indian IT services companies faced selling pressure in early trade on Tuesday, as concerns over US reciprocal tariffs weighed on investor sentiment. Infosys, TCS, Persistent Systems, and other IT stocks fell by up to 4% during the session.
Shares of Wipro, LTIMindtree, Tech Mahindra, Coforge, Tata Consultancy Services (TCS), and HCL Technologies declined between 1-2% on the BSE.
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Export-oriented IT stocks bore the brunt of the selloff, with the Nifty IT index tumbling nearly 3% intraday. All 10 constituents of the index traded in the red.
Trump’s Stance on Tariffs
US President Donald Trump reaffirmed his commitment to implementing sectoral tariffs, stating that countries mistreating American businesses should expect trade penalties. He is expected to unveil further details in an upcoming announcement, according to White House Press Secretary reports.
Addressing the media, Trump remarked, “Maybe tomorrow night or Wednesday, you will see tariff details," while assuring that the US would remain “very fair compared to other countries." He hinted that, in some cases, tariffs might be set at lower-than-expected levels.
Agency reports indicate that the White House has scheduled a major event for Wednesday, April 2, in the Rose Garden, where President Trump is expected to disclose specifics of his latest tariff strategy. Several cabinet members will attend, underscoring the announcement’s significance.
IT Sector Outlook Ahead of Q4 Earnings
Ahead of the Q4 earnings season, domestic brokerage firm Motilal Oswal noted that IT companies under its coverage are expected to post modest growth, though margins are likely to remain range-bound.
For large-cap IT firms, Motilal Oswal projects a weak Q4, with Infosys and TCS expected to report quarter-on-quarter (QoQ) revenue declines of 1.0% and 0.5%, respectively. HCLTech may see a 0.6% dip, while Tech Mahindra could fall by 0.8%. Wipro is anticipated to remain flat, while LTIMindtree may record marginal 0.2% growth.
Among mid-tier firms, LTTS is expected to lead with 15% constant currency (cc) growth (7% organic), followed by Persistent Systems and Coforge (4.0–3% growth), and Mphasis (3%). Cyient DET is likely to experience another weak quarter, with flat revenue and a 2.7% year-on-year (YoY) decline, missing its FY25 guidance due to sectoral challenges.
Valuations and Stock Picks
Motilal Oswal believes that most large-cap IT stocks are trading at their five-year average price-to-earnings (PE) multiples. While further de-rating is unlikely unless the trade war escalates or macroeconomic conditions in the US and Europe worsen, investor caution remains high.
The brokerage firm has named Tech Mahindra and Coforge as its top picks, favoring bottom-up transformation stories over discretionary-led names.
Among Tier-I firms, Tech Mahindra (TECHM) stands out due to early transformation gains, improved BFSI execution, and a promising telecom recovery, with more realistic margin expectations. HCLTech is also favored for its resilient portfolio, while TCS offers a balanced risk-reward profile.
In the Tier-II segment, Coforge leads with strong BFSI and insurance exposure, robust deal wins, and a solid growth outlook. Its organic business is performing well, and early cross-selling synergies with Cigniti suggest a quicker-than-expected turnaround.
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