Why Nifty IT Hit a Fresh 52-Week Low on Tuesday

The Nifty IT index slid to a new 52-week low on Tuesday, dragged by a broad selloff in the sector's heavyweights. Infosys, TCS, and Wipro each fell as much as 3% in early trade, with no single headline catalyst pinning the move. Traders pointed to a mix of profit warnings from US clients, a stronger rupee, and positioning ahead of the June-quarter earnings season.

The index has now lost roughly 18% from its September 2024 peak, making it the worst-performing sector on the Nifty this year. The trigger for Tuesday's leg lower appeared to be a cautious note from a global brokerage that cut its revenue estimates for the top five Indian IT firms, citing delayed deal closures in banking and retail verticals. The note, reviewed by traders, projected a 2-4% cut in FY26 dollar-revenue forecasts for the group.

Infosys, which carries the heaviest weight in the index, fell 2.8% to ₹1,412, its lowest since March 2023. Wipro dropped 2.5% to ₹285, while TCS slipped 1.9% to ₹3,890. HCL Technologies and Tech Mahindra also traded lower, though losses were shallower at around 1% each.

The rupee's recent strength against the dollar added pressure. A stronger rupee reduces the rupee value of dollar-denominated revenue, squeezing margins for firms that earn more than 60% of revenue from the US. The rupee has gained about 1.5% against the dollar over the past month, a headwind that analysts at Kotak Institutional Equities said could shave 30-50 basis points off operating margins for the sector in the June quarter.

Positioning data from the derivatives market showed a build-up of short interest in IT futures over the past week. Open interest in Nifty IT futures rose 12% while prices fell, a pattern traders read as fresh short creation rather than long unwinding. The put-call ratio for the index's top four stocks stood at 0.82, below the 1.0 threshold that signals bearish bias.

A trader at a domestic brokerage said the selling was broad-based and not driven by any single stock-specific event. "It's a macro rotation out of IT into domestic cyclicals," the trader said. "The dollar revenue outlook is weakening, the rupee is firming, and the earnings season is two weeks away. Nobody wants to hold through that uncertainty."

The Nifty IT index closed at 33,412, down 2.1% on the day. The broader Nifty 50 fell 0.4%, led by the IT drag.

AlphaScala's proprietary scoring system rates Infosys at 57 out of 100 (Moderate) and Wipro at 46 (Mixed), reflecting the sector's mixed fundamental signals. The next catalyst for the group is the June-quarter earnings season, which kicks off with TCS on July 11. Consensus estimates call for a 1-3% sequential revenue decline in constant currency terms for the top five firms.