Infosys, Wipro, Coforge, TCS, KPIT shares drop up to 6% today; stocks to buy

Wipro Ltd and Infosys Ltd led the fresh selloff in IT shares on Wednesday, as concerns over a moderating growth hit the sector, thanks to Trump tariffs and modest forecasts by global peers. Add to that the US rate cut hopes have been dashed and geopolitical risks are weighing on the business sentiment, with enterprises now taking a "wait-and-watch" stance.

GenAI adoption is progressing but not yet boosting IT services revenue, MOFSL noted, saying clients are still prioritisng capex over services spending, making FY26 discretionary spending uncertain.

On Wednesday, Wipro shares plunged 5.13 per cent to Rs 263.70. It was followed by Infosys that fell 4.75 per cent to Rs 1,581.75. "We prioritize correct positioning over predictability, favoring bottom-up transformation and margin-driven stories. We reposition our ratings to reflect this: we downgrade Infosys to 'Neutral' and Wipro to Sell, while we upgrade TechM to Buy," MOFSL said. Morgan Stanley also downgrade Infosys To 'Equal Weight' and suggested a new target price of Rs 1,740 from Rs 2,150 earlier.

MOFSL said LTIMindtree and TCS remained its preferred picks for their risk-reward balance. Among midcaps, it retained preference Coforge and Persistent, and sees the recent correction as an opportunity to buy. We downgrade LTTS to Neutral due to valuation discomfort.

Among other IT names, HCL Technologies Ltd, Persistent Systems, Mphasis and LTIMindtree fell over 3 per cent each. Sonata Software, Tata Elxsi, Mastek, Tech Mahindra, Cyient and Coforge fell over 2 per cent each. The largest IT player TCS also fell 2.07 per cent to Rs 3,500.

"We cut our EPS estimates and tone down target multiples to bake in aforesaid factors. We prefer TCS and Mphasis – their valuations being most attractive, supported by healthy fundamentals," ICICI Securities said.

This brokearge expects slower recovery in revenue growth for IT companies, as it factored in 2025 guidance by global peers, which suggests a modest uptick in growth.

It cited slowing revenue growth of top 10 US outsourcers across each vertical and noted that the recovery is being led by BFS and some sub-segments of retail, but is not broad-based. It is also factoring GenAI-led deflationary impact of revenue.

Nifty IT has corrected 13 per cent in the past two months and ICICI Securities said stocks in its coverage are trading near, or below, their 5-year average P/E.