HCLTech Q4 guide rattles IT stocks on Apr 22, 2026

IT stocks slide after HCLTech sets the tone

Indian IT services stocks came under sharp pressure in early trade on Wednesday, April 22, after HCL Technologies (HCLTech) reported its March-quarter numbers and issued FY27 revenue growth guidance that fell short of expectations. The drop in HCLTech quickly turned into a wider sector move, with investors treating the first large-cap IT earnings update of the season as a read-through for peers.

The selloff reflected a familiar market pattern in Indian IT: near-term price action tends to be driven less by the just-ended quarter and more by commentary on discretionary spending, deal conversions, and the pace of client decision-making in the US and Europe. On the day, the reaction extended beyond HCLTech to heavyweight peers such as Infosys and Tata Consultancy Services (TCS), pulling down the Nifty IT index and weighing on headline benchmarks.

Early market snapshot: HCLTech leads the fall

At around 9:18 am, HCLTech was among the biggest losers in the IT pack, down 9.1% at Rs 1,310.05 following its earnings update. Infosys slipped 2.5% to Rs 1,280.85, TCS fell 1.7% to Rs 2,565, and Tech Mahindra declined 3.8% to Rs 1,443.30.

By 9:57 a.m. IST, broader benchmarks were also lower. The Nifty 50 was down 0.70% at 24,399.95 and the BSE Sensex shed 0.84% to 78,611.08. The broader small-cap index rose 0.5%, while mid-caps were flat, highlighting that the pressure was more sector-specific than market-wide. Nine of 16 major sectors declined, with the IT index leading sectoral losses, down 3%.

What HCLTech reported for the March quarter

HCLTech’s March-quarter performance was viewed as underwhelming relative to Street expectations. The company reported revenue of Rs 33,981 crore and net profit of Rs 4,488 crore, both below estimates mentioned in market commentary.

Deal momentum also drew attention. New bookings were reported at $1.94 billion, described as the weakest level in three quarters, adding to concerns around demand conversion and near-term visibility. For investors tracking large-cap IT, bookings and management commentary are often used as leading indicators, especially when discretionary spending comes under pressure.

FY27 guidance: the key trigger behind the selloff

The sharper concern for markets came from HCLTech’s outlook. The company forecast FY27 revenue growth of 1% to 4% in constant currency, below analyst expectations cited at around 3% to 5%.

Management attributed the outlook to softer discretionary spending, delayed client decisions, and two client-specific ramp-downs. Separately, analysts at CLSA flagged that the FY27 revenue growth guidance was lower than estimated due to lower discretionary demand in the telecom vertical, softer platform revenues, and deferral of certain SAP programmes.

Brokerages react: downgrades and target cuts

Brokerage updates followed quickly after the earnings release, reinforcing the risk-off tone around the stock.

Jefferies downgraded HCLTech to Underperform from Hold and cut its target price to Rs 1,165 from Rs 1,390. The brokerage cited a worsening growth outlook and weaker-than-expected guidance, and it also trimmed earnings estimates.

Citi retained a Neutral stance but lowered its target price to Rs 1,385, saying the weak quarter and cautious guidance could weigh on the stock in the near term. Investec also remained cautious, noting that client-specific issues hurt multiple business segments and that some headwinds could continue into the June quarter.

Why Infosys and TCS fell without fresh commentary

The reaction was not limited to HCLTech because markets often use the first large-cap IT result as a signal for the broader sector. When one company highlights slower decision-making and weak discretionary spending, investors tend to assume that peers exposed to similar US and European client budgets could face comparable pressure.

That dynamic helps explain why Infosys and TCS were trading lower even before their own management commentaries arrived. The sector remains highly sensitive to global tech budgets, outsourcing demand, and macro uncertainty, and guidance language can move stocks as much as reported earnings.

Benchmarks fall as IT drags; global cues in focus

The IT-led weakness showed up in headline indices, with Nifty and Sensex in the red during early trade. Investors were also assessing the outlook for US-Iran peace talks after US President Donald Trump said he would indefinitely extend the ceasefire with Iran to allow for further peace talks, though it was not clear if Iran or Israel would agree.

Even with those global cues in the background, the day’s market narrative was dominated by IT guidance risk. Reports noted that nine of the 10 top losers on the Nifty 500 index were from the IT pack, as investors also assessed earnings from other technology names such as Persistent Systems and Tata Elxsi.

Recent context: rising caution on Indian IT

The selloff also came after several brokerages turned cautious on Indian IT last month. Jefferies had downgraded multiple large-cap IT names including Infosys and TCS, warning that AI-led disruption and slowing demand could compress valuations.

JP Morgan had also indicated ahead of the earnings season that management guidance would be a key trigger for IT stocks this quarter. In this backdrop, HCLTech’s FY27 band of 1% to 4% in constant currency landed as a negative surprise, particularly for investors looking for clearer signs of a demand rebound.

Key numbers at a glance

What investors are watching next

The next major trigger is commentary from Infosys, TCS and other IT players as they lay out their own demand signals for FY27. For now, the market message is straightforward: investors are less focused on past-quarter profits and more focused on whether growth can return in FY27.

If upcoming management commentaries echo themes of delayed decision-making and restrained discretionary spending, sector volatility can remain elevated. If not, the market will reassess whether HCLTech’s issues were largely company-specific, including the two ramp-down situations highlighted by management.

Conclusion

HCLTech’s March-quarter numbers and below-expectation FY27 constant-currency growth guidance triggered a sharp repricing across Indian IT stocks on April 22, dragging the IT index and weighing on benchmarks. Broker downgrades and target cuts added to the pressure, while investors looked ahead to guidance from Infosys, TCS and other large-cap peers for confirmation of sector-wide demand trends.