Several IT stocks declined on May 27, pushing the Nifty IT index down into the red to snap its two-day gaining streak and emerge as one of the top sectoral losers. This comes amid an overall downturn in the stock market, with benchmark indices Sensex and Nifty being down over 0.7 percent each in the afternoon.
The Nifty IT index dropped 0.75 percent to close at 37,501.45. The index was only second among the top losing sectors, after FMCG. Tata Consultancy Services (TCS) and HCL Tech were each down 1 percent each, while Persistent Systems, Wipro and Infosys were each down over 0.5 percent each. LTI Mindtree, Tech Mahindra and Mphasis shares ended the session in the red with marginal losses.
Notably, the IT stocks have seen significant volatility in the recent days amid US President Donald Trump’s tariff flip flops. Trump had announced a slew of reciprocal tariffs in April, which was followed by counter measures by several nations. Analysts remained concerned over the possibility of a US recession as inflation was likely to rise after the tariffs.
IT companies, who derive a major portion of their revenue from US, saw a significant decline in the share prices amid the recession fears. However, Trump soon announced a 90-day tariff pause, which reduced recession worries and boosted the IT stocks.
However, the temporary pause is set to expire in July, leaving investors in a limbo as what to expect for the IT stocks.
Additionally, the firms’ poor guidance for FY26 has further dampened investor sentiment. HSBC analysts have noted that while revenue growth has held steady for most large-cap players, a growing concern is the weakening trend in cash conversion, particularly in the mid-tier space in FY25. Cash conversion refers to a company’s ability to translate its net profit into actual cash flow from operations. It is a key marker of financial health, revealing how efficiently a business collects receivables, manages costs, and generates liquidity from its earnings.
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