Sensex Underperformers: Why ITC, TCS, and Trent Lagged in 2026

Introduction: Sensex Heavyweights Turn Laggards

Over the last twelve months, three prominent names on the Sensex have significantly underperformed the broader market, emerging as the index's top losers. Shares of the diversified conglomerate ITC, IT giant Tata Consultancy Services (TCS), and retail leader Trent have faced substantial selling pressure. ITC led the decline with a steep 29% fall, followed by TCS which slipped 23.5%, and Trent which dropped 19%. This collective downturn in blue-chip stocks has raised questions among investors about the specific challenges plaguing each company and their future outlook.

ITC's Prolonged Downturn

ITC has been a significant drag on investor portfolios, with its underperformance extending beyond the past year. The stock has delivered negative returns for up to three years, falling 20% over that period and 26% over two years. The fiscal year 2026 was particularly harsh, with the stock losing 30% and wiping out nearly Rs 2.36 lakh crore in investor wealth. The share price has consistently traded below key psychological levels, recently closing below the Rs 300 mark for nine consecutive sessions and even dipping to a 52-week low of Rs 287. This sustained bearish trend has been driven by a combination of regulatory headwinds and weakening technical indicators.

The Excise Duty Catalyst

The primary trigger for the recent sharp correction in ITC's stock was a significant fiscal policy change. The Parliament's approval of the Central Excise (Amendment) Bill, 2025, led to a substantial increase in excise duties on cigarettes and other tobacco products. The finance ministry notified a new duty structure ranging from Rs 2,050 to Rs 8,500 per 1,000 sticks, effective February 1, 2026. Analysts estimate this could force the company to implement MRP hikes of 20-40%, potentially impacting sales volumes. The market reacted swiftly, with the stock erasing over Rs 82,000 crore in market capitalization in just a few trading sessions following the announcement.

Technical Weakness and Market Sentiment

From a technical standpoint, ITC's stock is in a clear downtrend. It is trading below all its short-term and long-term moving averages, confirming strong bearish sentiment. The Relative Strength Index (RSI) stood at 37.7, indicating it was approaching the oversold zone but had not yet signaled a reversal. The persistent fall led to downgrades from market analysis firms, with MarketsMOJO changing its rating from 'Hold' to 'Sell' in February 2026, citing valuation pressures and flat financial performance in Q3 FY26. Despite the downturn, the company's core business showed some resilience, with cigarette volumes rising 6.5% year-on-year and the FMCG segment growing 11%.

TCS Grapples with Industry Headwinds

Tata Consultancy Services, a bellwether for the Indian IT sector, has also faced a challenging year. The stock's 23.5% decline over the past year is part of a longer-term slump, with shares falling 38% in two years. The underperformance is attributed to a confluence of factors, including the looming threat of artificial intelligence disrupting traditional IT service models, geopolitical tensions, and concerns over a gradual recovery in client demand. These headwinds have cast a shadow over the entire IT sector, with TCS bearing a significant impact as a market leader.

Financial Performance and Analyst Views on TCS

Despite the stock's decline, TCS reported annual revenue of Rs 2,55,324 crore for the year ending March 2025, an increase from the previous year. However, its net profit for the quarter ending December 2025 saw a decrease compared to the corresponding period in the prior year. Analyst sentiment on TCS is mixed, reflecting uncertainty about its near-term growth trajectory. While some brokerages maintain a 'Hold' or 'Add' rating, their price targets vary widely.

Trent: Short-Term Pain, Long-Term Gain

Trent, the retail arm of the Tata Group, completes the list of top Sensex losers with a 19% decline in the past year. The stock has also fallen 17% in the last six months. However, Trent's story is one of sharp contrast when viewed through a long-term lens. The stock has delivered exceptional returns over three and five years, gaining 164% and 431% respectively. This suggests that while the stock is currently facing short-term pressures, its underlying growth story in the retail sector remains compelling for long-term investors. Brokerages like HDFC Securities and Antique Stock Broking have maintained 'Buy' ratings with revised target prices of Rs 4,300 and Rs 4,856, respectively.

Brokerage Outlook: A Mixed Bag

Despite the severe correction in ITC's stock, several brokerages remain bullish. Sharekhan issued a 'Buy' call with a price target of Rs 400, citing attractive valuations and the company's diversified business model as key strengths. Similarly, UBS has a 'Buy' rating with a target of Rs 395. This optimism contrasts with more cautious 'Hold' ratings from others like Systematix, which set a target price of Rs 355. The divergence in views highlights the debate between ITC's long-term value proposition and the immediate challenges posed by the new tax regime.

Conclusion

The underperformance of ITC, TCS, and Trent over the past year stems from distinct, company-specific challenges. ITC is grappling with a significant regulatory shock to its core cigarette business. TCS faces broad sectoral headwinds related to technological disruption and uncertain global demand. Trent's decline appears to be a short-term correction in an otherwise strong long-term growth narrative. For investors, the path forward will depend on how each company navigates its unique obstacles. ITC's ability to manage pricing and protect volumes, TCS's strategic response to the AI evolution, and Trent's continued execution in the competitive retail landscape will be critical factors to watch in the coming quarters.