Shares of Infosys and HCLTech fell nearly 2% following a note from CLSA, which advised investors to trim their positions in the IT sector ahead of the Q3FY26 earnings season. The brokerage expects moderate earnings growth for IT companies this quarter, citing margin pressures and softer demand trends.
Key takeaways from CLSA’s update:
- HCLTech downgraded from ‘Outperform’ to ‘Hold’.
- Tech Mahindra rating cut from ‘High Conviction Outperform’ to ‘Outperform’.
- Soft Q3 performance expected across the IT sector due to slower client spends, currency headwinds, and margin compression.
The brokerage’s caution led to profit booking in large-cap IT names, with investors reassessing exposure ahead of earnings. Market participants will be watching the upcoming quarterly results and management commentary to gauge the sector’s near-term trajectory.
Analysts suggest that while long-term fundamentals remain intact, short-term volatility is likely, especially for companies exposed to US tech spending cycles.
