Mphasis, Coforge, TCS: NIFTY IT index has fallen 25% so far in 2025; what to expect for FY2026?

Data show that the NIFTY IT index has tumbled 25% so far in 2025 (year-to-date, or YTD), and the current global economic scenario after Trump's tariff measure has only exacerbated the concern.

The export-led Indian IT sector is not directly hit by Trump's tariff order on goods, but there could be worrisome indirect bearings on it arising out of a possible slowdown in decision-making and GDP growth in America over higher tariffs, which may then cloud demand from specific verticals.

The $250 billion Indian IT pack – which derives a substantial chunk of its revenue from servicing US clients – is in a wait-and-watch mode to assess the full impact as it unfolds in the coming quarters (as well as the trade negotiations in the offing that could sway equations).

India's IT services sector has already been facing growth headwinds over the past quarters, with clients in the US and EU closely scrutinising tech spends amid economic pressures, while the increased charm of AI has led to fears of reduced job creation globally.

Adding to that now, prospects of global economic wars, given the US's fresh tariff offensive on trading partners and major allies, have deepened worry lines about a slowdown in the United States and uncertainties ahead.

Expert Views

According to a news report, global broking firm Jefferies, in its latest note on India's Information Technology (IT) sector, warned that growing uncertainty and a potentially worsening business outlook, especially following the recent tariff announcement, could negatively impact IT demand through at least FY26.

The broking firm has cut earnings per share (EPS) estimates for Indian IT companies by 2–14%.

A re-rating of IT stocks is unlikely unless there is a meaningful improvement in the outlook for US GDP growth, the note added.

Echoing similar views, analysts at Tata Mutual Fund, in its latest report, said that discretionary IT spending remains subdued. Additionally, concerns over a potential US slowdown, high interest rates, etc., are negatively impacting IT spending.

March quarter preview

Analysts at InCred Equities expect Tier-I IT services companies to report an average 0.3% QoQ constant currency (CC) revenue decline in 4QFY25F led by seasonality, decision delay due to tariff-led macroeconomic uncertainty, and account-specific challenges outweighing the benefits of deal ramp-ups.

Reported growth in US dollars or $ terms could be lower as the US dollar appreciated by an average of 1.7% vs the Great Britain Pound (GBP) and 1.3% vs the Euro.

Across large caps, Infosys could report the highest sequential decline in constant currency (CC) terms, while Persistent Systems and Coforge could report strong growth. L&T Technology Services’ (LTTS IN) growth could be aided by full-quarter integration of the Intelliswift acquisition.

Slower global growth and the pass-back of AI-led productivity gains could be key considerations baked into company-specific FY26F/1QFY26F guidance, which the research firm believes would have a wider range vs prior years, while some companies may be considering a pause, given the limited visibility.