Mid-cap IT stocks crash 60-78%; TCS down 55% from peak
Synopsis
India's IT sector correction has gone far deeper than headline numbers suggest. While TCS is down 55% from its peak, mid-cap names like Happiest Minds have shed nearly 78% — and with Accenture cutting its outlook and Morgan Stanley warning of FY27 guidance risk, the sector's ₹26 lakh crore market cap remains under serious pressure.
Key Takeaways
TCS has fallen nearly 55 per cent from its record high of ₹4,592 ; Wipro is down 52 per cent , LTIMindtree 50 per cent , and Infosys 48 per cent .
Happiest Minds leads mid-cap losses at roughly 78 per cent below its all-time high; Newgen Software is down 74 per cent and Sonata Software 66 per cent .
Birlasoft , Tata Elxsi , and KPIT Technologies have each shed more than 60 per cent from their peaks.
Accenture 's weaker-than-expected revenue guidance for the current quarter triggered the latest leg of the sell-off.
Morgan Stanley warned of spillover into coming quarters; HSBC attributed weakness to geopolitical disruptions rather than AI concerns.
India's IT sector, valued at ₹26 lakh crore , earns nearly 57 per cent of revenue from the US market .
India's information technology (IT) sector is facing a broad and deepening correction, with several mid-cap IT stocks plunging more than 60 per cent from their all-time highs — outpacing the 55 per cent decline already recorded by Tata Consultancy Services (TCS) from its record peak of ₹4,592. The sell-off, which has accelerated following a cautious demand outlook from global consulting giant Accenture, has wiped out a significant portion of the sector's market value as investor confidence in near-term growth wavers.
The Damage Across Large and Mid-Cap IT
Tata Consultancy Services (TCS) has fallen nearly 55 per cent from its record high, while Wipro is down 52 per cent, LTIMindtree has declined 50 per cent, and Infosys has shed 48 per cent from their respective peaks. Mid-cap names have fared considerably worse. Happiest Minds leads the losers, having collapsed roughly 78 per cent below its all-time high. Newgen Software has posted a 74 per cent decline, and Sonata Software has slipped 66 per cent from its peak.
Birlasoft, Tata Elxsi, and KPIT Technologies are each down more than 60 per cent, while Nucleus Software, Mastek, and Zensar Technologies have seen their shares halve from record levels, according to reports.
Accenture's Warning Fans the Flames
Accenture, the global consulting and technology services giant, slashed its revenue outlook for the current quarter — a move that left investors disappointed despite the firm posting healthy profits. For Indian IT, Accenture's guidance is closely watched as a bellwether for discretionary technology spending by Western enterprises. A weaker-than-expected print from Accenture typically signals that clients are tightening budgets, directly affecting order flows for Indian outsourcing firms.
Multiple brokerages have warned that demand uncertainty and geopolitical disruptions could continue to weigh on sector growth well into the medium term. Notably, this marks the third consecutive quarter in which forward guidance has broadly disappointed the street.
What Analysts and Global Banks Are Saying
Investment bank Morgan Stanley flagged that uncertainty could spill over into coming quarters and potentially affect FY27 guidance from India's top-tier IT firms. HSBC assessed that geopolitical disruptions — rather than concerns around AI-led productivity gains — drove much of the sector's weakness. The bank added that Indian IT companies continue to lack meaningful near-term catalysts, although sector valuations are now approaching trough levels.
Analysts also noted that fourth-quarter earnings and FY27 outlooks from India's leading IT firms largely missed market expectations, further eroding investor confidence.
Structural Headwinds Weighing on the Sector
India's IT sector — valued at around ₹26 lakh crore — derives nearly 57 per cent of its revenue from the US market, making it acutely sensitive to American economic conditions. Higher US interest rates have compounded the pressure by raising recession risks, which in turn could prompt clients in key overseas markets to cut technology spending and delay discretionary projects, as flagged in reports earlier in May.
This combination of macro headwinds, weak guidance, and geopolitical uncertainty has left the sector at a crossroads. Whether FY27 outlooks stabilise — or deteriorate further — will likely determine the pace and depth of any recovery.
Point of View
Newgen 74%, Birlasoft and Tata Elxsi past 60% — is not a routine sector rotation. It reflects a structural repricing of growth assumptions that were built on a post-pandemic demand boom that has now clearly reversed. The uncomfortable reality is that Indian IT's concentration risk in the US market, at 57% of revenues, was always a vulnerability; rising US rates and client budget freezes have simply made it visible. With HSBC pointing to geopolitical disruption rather than AI as the primary driver, the 'AI will save IT margins' thesis looks increasingly thin. The real question for FY27 is whether large-cap guidance stabilises enough to arrest mid-cap freefall — or whether trough valuations keep falling as the floor itself moves lower.
NationPress
6 Aug 2026
Frequently Asked Questions
Why are Indian IT stocks falling so sharply in 2025?
Indian IT stocks have been falling due to a combination of Accenture's weaker-than-expected revenue guidance, geopolitical disruptions, and higher US interest rates raising recession risks. These factors have caused clients in key overseas markets to cut technology spending and delay discretionary projects, directly hitting order flows for Indian IT firms.
Which IT stocks have fallen the most from their all-time highs?
Happiest Minds leads the decline at roughly 78 per cent below its all-time high, followed by Newgen Software at 74 per cent and Sonata Software at 66 per cent. Among large caps, TCS has fallen nearly 55 per cent from its record high of ₹4,592, while Wipro is down 52 per cent and Infosys 48 per cent.
What did Accenture say that spooked Indian IT investors?
Accenture slashed its revenue outlook for the current quarter, signalling weaker demand for technology and consulting services from Western clients. Since Accenture is widely regarded as a bellwether for global IT spending, its guidance cut raised concerns about near-term growth prospects for Indian IT outsourcing firms.
What are Morgan Stanley and HSBC saying about Indian IT?
Morgan Stanley warned that demand uncertainty could spill into coming quarters and affect FY27 guidance from India's top IT firms. HSBC found that geopolitical disruptions — not AI-led productivity concerns — were the primary driver of weakness, and noted that Indian IT stocks lack meaningful near-term catalysts, though valuations are nearing trough levels.
How exposed is Indian IT to the US market?
India's IT sector, valued at around ₹26 lakh crore, derives nearly 57 per cent of its revenue from the US market. This heavy dependence makes the sector acutely sensitive to American economic conditions, including interest rate movements and shifts in corporate technology budgets.
