- TCS fell ~10% in three days, slipping below SBI’s market cap.
- Infosys and Wipro each shed more than 8% and 7% respectively.
- Nasdaq’s tech index is the master key – a weak rebound could deepen the Indian IT rout.
- Historical patterns suggest Indian IT is vulnerable when US tech stalls, but a lag in AI exposure may cushion the blow.
- Bull and bear playbooks diverge sharply: timing the Nasdaq bounce versus preparing for prolonged downside.
You missed the warning sign that just slashed TCS by 10%—and it could hit your portfolio.
Why the Nasdaq Decline Is a Trigger for Indian IT Stocks
Indian technology exporters are essentially extensions of the U.S. tech ecosystem. Their revenue streams, especially for high‑margin digital services, are booked in dollars and tied to the health of U.S. enterprise spending. When Nasdaq‑listed giants such as Nvidia, Apple, Alphabet, Meta, and Microsoft tumble, the order books of Indian IT firms contract in tandem. The recent three‑day sell‑off erased roughly ₹120 billion of market value across the sector, pushing TCS below State Bank of India’s valuation for the first time.
Analysts stress that the nature of the Nasdaq recovery matters. A genuine bounce‑back—where gains exceed the losses incurred—usually restores client confidence, prompting Indian firms to secure fresh contracts. A “dead‑cat bounce,” where the index merely claws back a fraction of its drop, often signals lingering weakness and can keep the IT earnings outlook muted.
Sector‑wide Impact: From TCS to Wipro – Who’s Feeling the Pain?
Beyond the headline makers, mid‑tier players are also under fire. Birlasoft, Firstsource Solutions, Cyient, Coforge, Happiest Minds, and HCL Technologies all logged double‑digit percentage declines over the same three‑day window. The breadth of the sell‑off suggests that the market is pricing in a systemic slowdown rather than isolated company‑specific issues.
Key metrics illustrate the pressure:
- TCS: Price fell from ₹2,984.60 to ₹2,695 – a 9.7% drop.
- Infosys: Price slid from ₹1,497.80 to ₹1,369 – an 8.6% slide.
- Wipro: Price moved from ₹231.47 to ₹214.38 – a 7.5% dip.
All three firms have cash reserves that are modest by global standards, a lingering effect of four years of margin compression. Weak balance sheets amplify vulnerability to any protracted slowdown in U.S. tech spend.
Historical Parallel: 2008 Crisis vs. AI‑Driven Volatility
During the 2008 subprime crisis, Indian equities proved relatively insulated because domestic consumption buffered the export‑heavy IT segment. However, that period featured a robust dollar demand for services, unlike today’s scenario where AI‑centric projects dominate U.S. tech spend.
Last year, the AI rally propelled Nasdaq to historic highs while Indian IT lagged, missing out on the upside. That lag created a “reverse‑correlation” advantage: when the AI trade unwound, Indian firms were not as over‑exposed, limiting the depth of any correction. The current sell‑off is a hybrid—U.S. tech is correcting, but AI‑related hype is also fading, creating a double‑edge risk for Indian IT.
Technical Snapshot: What the Charts Reveal About Momentum
On the daily chart, TCS’s 20‑day moving average has crossed below its 50‑day line, a classic bearish crossover. The Relative Strength Index (RSI) sits at 38, edging toward oversold territory but still above the 30 threshold that would suggest a technical bounce.
Conversely, the Nasdaq Composite is holding just above its 200‑day moving average, indicating a potential support zone. If the index fails to breach this level, momentum indicators (MACD, Stochastic) point to a continuation of the downtrend, which would keep Indian IT under pressure.
Investor Playbook: Bull and Bear Scenarios for Indian IT
Bull Case: A decisive Nasdaq rebound (≥3% gain over two sessions) restores U.S. corporate IT spend. Indian firms capture renewed offshore contracts, earnings beat expectations, and valuations re‑price to historic averages. In this scenario, consider adding TCS or Infosys on dips, targeting 12‑month upside of 15‑20%.
Bear Case: Nasdaq stalls or slides further, prompting U.S. firms to freeze or reduce outsourcing budgets. Indian IT cash buffers erode, leading to cost‑cutting measures and possible layoffs. Market cap compression could push sector‑wide multiples down 10‑15% from current levels. Defensive positioning would involve reducing exposure, hedging with IT‑linked ETFs, or shifting to high‑quality dividend payers like HCL Technologies.
Bottom line: Your portfolio’s fate hinges on whether the Nasdaq can deliver a genuine bounce or merely a limp recovery. Stay vigilant, monitor the 20‑day/50‑day crossover on TCS, and keep an eye on Nasdaq’s 200‑day support. The next few trading sessions will set the tone for the rest of the quarter.