Infosys, TCS, HCLTech fall up to 5%: Why are IT stocks down today?

Infosys, TCS, HCLTech and other IT shares fell sharply ahead of the US Federal Reserve's policy decision. Rising crude prices and persistent foreign investor selling deepened the broader risk-off mood.

In Short

• IT stocks fell sharply ahead of US Fed policy decision
• Rising crude above $115 and geopolitical risks weigh on markets
• Fed signals crucial for US demand and Indian IT outlook

IT stocks tumbled on Wednesday as investors turned cautious ahead of the US Federal Reserve's policy decision, with concerns over the interest-rate outlook adding to pressure on companies that earn a significant share of their revenue from the American market.

The Nifty IT index fell around 3.3% in early trade on October 28. Mphasis was the worst hit among the major IT stocks, dropping 4.94%, while Infosys fell 4.26%. Tech Mahindra declined 3.13%, HCLTech lost 3.07% and TCS slipped 2.98%.

The sell-off came as the broader market also opened lower, with rising crude oil prices and geopolitical uncertainty weighing on sentiment. Here are the key factors behind the decline in IT stocks.

US FED DECISION IN FOCUS

The US Federal Reserve's policy decision is a key trigger for markets on Wednesday. Investors are watching for signals on the future direction of interest rates, particularly whether borrowing costs could remain elevated for longer or rise again if inflation proves difficult to contain.

Higher interest rates can make borrowing more expensive for businesses and consumers, potentially slowing economic activity and prompting companies to reassess spending. For Indian IT services firms, this matters because the US is a major source of revenue.

When American businesses become cautious about the economic outlook, they may delay technology upgrades, reduce discretionary spending or postpone large IT transformation projects. Such decisions can affect the deal pipeline and revenue growth of Indian IT companies.

The concern is therefore not simply about the Fed's decision on Wednesday, but also what its policy signals could mean for corporate spending and demand for technology services in the US.

CRUDE OIL ABOVE $115 ADDS TO PRESSURE

Rising oil prices have added to the pressure on Indian equities. Brent crude climbed 1.2% to around $115.3 per barrel after an attack on a refinery in Saudi Arabia renewed concerns about energy supply disruptions and inflation.

Higher crude prices are a concern for India because the country depends heavily on imported oil. A prolonged rise can put pressure on inflation, the rupee and corporate costs, while limiting the scope for monetary easing.

The market is also tracking geopolitical risks, including reports of possible renewed US strikes on Iran after the US midterm elections.

Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said: “There are reports of possible renewed strikes by the US on Iran after the mid-term elections in the US. Brent crude has again firmed up to above $115, which is bad news for the Indian economy and markets.”

His comments highlight how the combination of geopolitical uncertainty and higher oil prices is adding to investor caution beyond the immediate focus on the Fed.

IT STOCKS LEAD SECTORAL LOSSES

The Nifty IT index was among the worst-performing sectoral indices in early trade, falling around 3.3%. Selling was widespread across large IT companies, with Infosys, TCS, HCLTech and Tech Mahindra all recording losses of around 3% or more.

The weakness in IT stocks also contributed to the decline in the benchmark indices. At around 9.27 am, the Sensex was down 730.70 points, or 0.99%, at 72,867.97, while the Nifty 50 had fallen 186.45 points, or 0.82%, to 22,563.30.

Thirteen of the 16 major sectoral indices were trading lower, reflecting broad-based caution among investors.

WHAT COULD HELP MARKETS RECOVER?

Vijayakumar said a recovery in Indian equities would depend on two important conditions: a decline in crude oil prices and a turnaround in foreign portfolio investor flows.

“For the Indian market to revive there are two important conditions now. One, crude prices have to decline. There is no clarity on that. Two, FPIs have to stop their relentless selling and turn buyers,” he said.

He also pointed to substantial foreign investor outflows, saying FPIs had withdrawn $19 billion in 2025 and $31 billion so far in 2026. He said changes in long-term capital gains (LTCG) tax appeared increasingly likely, arguing that sustained outflows were hurting India's otherwise strong macroeconomic fundamentals.

For IT stocks, the immediate focus remains on the Fed's policy signals and what they indicate about the US economic outlook. If borrowing costs stay high and American companies become more cautious about spending, demand visibility for Indian IT services firms could remain under pressure. However, the extent of any impact will depend on actual client spending, deal conversion and the outlook provided by individual companies.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)

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