Tech Mahindra, TCS, LTI Mindtree Decline, Nifty Slips Nearly 5 Per Cent Month-To-Date: Know Why

Shares of Tech Mahindra, LTI Mindtree and other Nifty IT stocks declined on July 18. Tech Mahindra shares fell nearly 2 per cent to an intraday low of Rs 1538 apiece on the NSE. On the other hand, shares of LTI Mindtree declined nearly 3 per cent to an intraday low of Rs 5070.5 apiece on the NSE. Amid the declines in IT stocks, the Nifty IT index fell 0.5 per cent to an intraday low of Rs 36951.85 apiece. As of July 18, the Nifty IT index has declined nearly 5 per cent month-to-date. Notably, the Nifty 50 index has slipped over 2 per cent month-to-date.

Why Is the Nifty IT Index Declining

On July 18, the Nifty IT index finished the session flat, up by 0.01 per cent at 37,141.85 levels. The 10-share index saw five stocks closing higher and five closing in the red. Index heavyweights such as Tata Consultancy Services and Tech Mahindra finished the session lower and dragged the index down. Other losers included LTI Mindtree, Mphasis and Coforge which closed lower by 1.4 per cent on the NSE. Wipro, Persistent, Infosys and HCL Technologies shares bucked the trend and closed higher by up to 2.21 per cent.

IT stocks continued to trade under pressure due to headwinds such as selling by foreign institutional investors, tepid June quarter results and escalating trade tensions between India and the US. So far major IT sector companies such as TCS, HCL Technologies, LTI Mindtree and Wipro have announced their financial results for the first quarter of FY26.

Tepid Q1 Results

Tata Consultancy Services posted robust bottom-line growth but its revenue quality and commentary left investors disappointed. TCS's revenue in constant currency terms declined by 3.1 per cent on a year-on-year basis. Additionally the management commentary also heightened caution among investors as TCS CEO K Krithivasan said in a release that continued global macro-economic and geo-political uncertainties caused a demand contraction in the first quarter of FY 2025-26. On the other hand, HCL Technologies posted a 10 per cent decline in its consolidated net profit for Q1FY26. The company's net profit stood at Rs 3,843 crore, falling below street estimates of Rs 4,224 crore.

Sumit Pokharna, VP, Fundamental Research at Kotak Securities, told Outlook Money that the earnings of key large-cap companies have been below expectations, leading to a decline in the overall IT space.

"Yes. Key large-cap IT companies have declared results, and the same are below expectations," Pokharna said.

FII Selloffs

Apart from tepid results, selloffs by Foreign Institutional Investors have also contributed to the decline seen in Nifty IT stocks. FIIs remained net sellers in July, selling shares worth Rs 17,330.49 crore in the cash segment. Notably FIIs have remained net sellers for the last two consecutive sessions. Pokharna added that amid the selloffs FIIs have reduced their stake in select IT stocks such as Wipro.

"FIIs continued to be net cash sellers to the tune of Rs. 17,330 crore as of July '25. In the case of Wipro, we have seen the FII stake has reduced to 8.16 per cent in Q1FY26 from 8.35 per cent in Q4FY25. As of now, we have limited information about FIIs' sell-off in the IT sector," Pokharna said.

India-US Trade Deal Delays

Other factors that have turned investor sentiment against domestic IT stocks are likely to have included rising trade tensions between India and the US. Notably, the August 1, deadline for the imposition of reciprocal tariffs on US trading partners is fast approaching. The imposition of reciprocal tariffs is expected to impact export-focused domestic IT companies.

Thus, investors are keenly awaiting the signing of a trade deal between India and the US before the deadline. So far, a trade deal has not been finalised, and negotiations are underway. According to a statement given by the Ministry of External Affairs spokesperson Randhir Jaiswal given at a press briefing on July 17, negotiations between the two countries are still underway as they are trying to iron out pending issues.

"These negotiations are on. Both sides are in touch with each other. They are trying to iron out issues," Jaiswal said at the press briefing.

Pokharna added that the uncertainty regarding tariff imposition and delays in singing of a trade deal have impacted the decision making of investors.

"Market participants do believe that global uncertainty has resulted in a delay in deal awarding and has impacted decision-making. Notably, we started the quarter (Q1FY26) with significant macro uncertainty, which kept demand muted. Discretionary spending continues to be weak, but has stabilised. Expect it to remain stable for the rest of the year," Pokharna said.