Infosys shares tank 3%, down 12% in a month; what's hurting the stock

Shares of Infosys Ltd have fallen 3 per cent in Tuesday's trade, the worst among tier 1 IT players, as concerns over a possible recession in the US weighed on investor sentiment.

To recall, in its Q3 results, Infosys noted that North America had returned to positive growth trajectory after four quarters, growing at 4.8 per cent, while Europe grew at 12.2 per cent YoY in constant currency terms, twice the company level. The IT firm had noted that it was seeing an improvement in Retail and consumer product industry in the US with discretionary pressure easing.

That said, in overnight trade, US indices tumbled up to 4 per cent after the US President Donald Trump declined to predict whether his tariff policies could lead to a recession, roiling investor sentiment.

Infosys fell 3 per cent to Rs 1,651.70. CLSA upgraded this stock to 'Outperform' and pegged its target price at Rs 1,978.

Tata Consultancy Services (TCS), Wipro and Tech Mahindra declined up to 2 per cent. HCL Technologies was flat.

"TCS and Infosys appear well-positioned to use AI to cement their dominance. They have scale to invest and broad client trust. They may enjoy higher win rates in the evolving deal mix, supporting steady revenue growth even if the macro environment is tough," Centrum Broking said on Monday.

Kotak in a note last week said FY26 growth across most IT companies is likely to be modestly better than FY2025, yet below the normalised levels due to a slower-than-expected recovery in discretionary spends, uneven recovery in a few verticals (especially hi-tech) and possible disruption from AI adoption of enterprises.

"The CY2025E outlook of global companies implies a modest improvement. Indian IT stocks have corrected about 9-21 per cent in the past month, offering some comfort. Investors would ponder the right multiple for the sector, given another year of moderate revenue growth—on first principles, a few stocks offer reasonable upsides," it said.

The brokerage upgraded TCS and Tech Mahindra to 'Buy' and Mphasis to 'Reduce'. It also liked Infosys, Coforge and Indegene.