Tech Stocks Sink to Eight-Month Low as Morgan Stanley Flags Growth Risks

Nifty IT Declines 2% Amid Downgrades and Slowing US Client Spending

Indian IT stocks faced a sharp selloff on March 13, 2025, as Morgan Stanley issued a cautious outlook, citing risks from a changing global macroeconomic landscape and technological shifts. This led to a steep decline in Nifty IT, which plunged nearly 2% to its lowest level since July 2024, extending its year-to-date losses to 16%.

The selloff was led by Infosys, Wipro, HCLTech, TCS, and Tech Mahindra, with concerns mounting over slowing discretionary spending by US clients amid global uncertainties.

Morgan Stanley’s Bearish View on IT Stocks

• Morgan Stanley downgraded Infosys to ‘Equal Weight’, slashing its target price to ₹1,740 per share from ₹2,150.
• The brokerage cut target prices across major IT firms, stating that valuation and revenue growth face strong downside risks due to shifting macro conditions.
• TCS remains Morgan Stanley’s top IT pick, but its target price was revised downward to ₹3,950 per share from ₹4,660, still implying an upside potential of 13% from the last closing price.
• Coforge received an ‘Overweight’ rating, but its target price was cut to ₹9,400 per share from ₹11,500, signaling a 24% upside potential.

Infosys, Wipro, and HCL Tech Lead Market Declines

• Infosys shares dropped nearly 4%, hitting an eight-month low, after both Morgan Stanley and Motilal Oswal issued downgrades.
• Motilal Oswal rated Infosys ‘Neutral’, citing uncertainty in US client spending as companies adopt a ‘wait-and-watch’ stance amid global tariff-related concerns.
• Wipro shares plunged 4%, while L&T Technology Services and Persistent Systems declined by nearly 2% each.
• HCL Tech’s stock fell 3% to ₹1,527 per share, following Morgan Stanley’s equal-weight rating and a target price cut to ₹1,600 per share from ₹1,970.
• Tech Mahindra also witnessed selling pressure, with Morgan Stanley maintaining an equal weight rating but reducing the target price to ₹1,550 per share from ₹1,750.

Nifty IT Hits Multi-Month Lows as Sector Faces Weakening Growth

The latest report from ICICI Securities noted that Nifty IT has corrected by 13% in the past two months, with valuations now hovering at or below their five-year average price-to-earnings ratio (P/E).

Morgan Stanley’s sector-wide caution highlights concerns that Indian IT firms may struggle to maintain revenue growth momentum, especially with US-based clients cutting back on technology spending in response to macroeconomic and trade-related uncertainties.

With global demand trends shifting, the IT sector could remain under pressure in the coming months unless economic conditions stabilize and client spending picks up.