Infosys shares dropped 5% on Wednesday as the company lowered its FY27 revenue growth forecast, leading a 4% decline in the Nifty IT index. The move follows a 12% sector rally earlier this month and triggered multiple analyst downgrades due to concerns over soft demand. Investors are now re-assessing valuations amid fresh sector-wide pressure.
Infosys shares fell 5% to ₹1,103.40 on Wednesday after the software major cut its FY27 revenue growth forecast to a range of 1–2%. This news triggered a sharp selloff across the technology sector, dragging the Nifty IT index down by 4%. The decline marks a significant shift in investor mood, as the IT sector had experienced a strong 12% rally earlier in October, leaving many stocks trading at high valuations.
The volatility in Infosys stock followed a series of downgrades from major brokerages, including Axis Capital, Arihant Capital, and IIFL Capital Services. Analysts pointed to growing challenges, specifically soft demand in the retail and hi-tech business segments. The guidance cut suggests that the company is struggling to maintain its earlier growth pace, with management noting that performance in the first half of the year was weaker than expected. Concerns over the impact of AI on business models and pricing pressure—where companies find it harder to charge higher rates for their services—have also weighed on market sentiment.
The selling pressure was not limited to Infosys. Other major IT companies also saw significant declines. Mphasis and Coforge, often viewed as more sensitive to growth shifts, fell between 5% and 6%. Larger players like Tata Consultancy Services, HCL Technologies, and Tech Mahindra also saw their stock prices drop by 3% to 4%. This broad correction suggests that the market is re-pricing the entire IT sector to account for lower growth expectations after the recent run-up in prices.
While the company continues to highlight a robust pipeline of deals and the long-term benefits of AI integration, investors remain cautious about the near term. The management noted that the second half of the year may face seasonal problems, such as upcoming holiday furloughs and fewer working days in the third and fourth quarters, which typically limit revenue growth.
For investors, the key monitorables will be how the company manages its profit margins amid continued pricing pressure and whether the demand in key sectors like retail and hi-tech shows signs of recovery in the coming quarters. The current reaction reflects a broader skepticism about how quickly the industry can return to a higher growth trajectory, especially as the sector moves away from the peak demand periods seen in previous years.