18 February 2026 Punjab Khabarnama Bureau : Indian information technology (IT) stocks witnessed a sharp pullback on Tuesday, with frontline and mid-cap names falling up to 3% after enjoying two consecutive sessions of gains. Shares of Infosys, Wipro, and Persistent Systems were among the notable laggards, as investors chose to book profits amid a combination of global uncertainty, cautious outlook on discretionary spending, and mixed cues from overseas markets.
The broader IT pack also came under pressure, with selling seen across large-cap and mid-cap counters. The Nifty IT index slipped noticeably, underperforming the broader benchmark indices, which remained relatively stable. Market participants attributed the decline primarily to valuation concerns and a lack of fresh positive triggers following the recent rebound.
Profit Booking After a Short-Term Rally
One of the key reasons behind the fall was profit booking. Over the last two sessions, IT stocks had rebounded from recent lows, supported by bargain hunting and expectations that the worst might be over for the sector. However, analysts believe that the rally lacked strong fundamental backing and was largely technical in nature.
“After the recent run-up, investors preferred to lock in gains, especially in stocks that had risen sharply despite muted earnings visibility,” said a market analyst. Stocks such as Infosys and Wipro, which had recovered modestly after prolonged underperformance, saw renewed selling pressure as traders turned cautious.
Global Cues and US Market Weakness
Indian IT companies derive a significant portion of their revenues from the US and Europe, making them highly sensitive to global economic developments. Weak cues from US markets, particularly technology stocks, also weighed on sentiment.
Concerns around sticky inflation in the US and the possibility of interest rates remaining higher for longer have raised fears of delayed recovery in IT spending. A stronger US dollar, which initially supports IT exporters, has recently added to volatility, as currency movements remain unpredictable.
Moreover, comments from global tech companies about cautious near-term spending plans have reinforced the belief that enterprise clients are still holding back on large discretionary IT projects.
Muted Demand Outlook and Deal Delays
Another major factor impacting IT stocks is the subdued demand environment. While companies have reported stable deal pipelines, decision-making cycles remain longer, and clients continue to prioritise cost optimisation over digital transformation initiatives.
Mid-tier IT firms like Persistent Systems, which had earlier benefited from niche digital and cloud deals, also faced selling pressure as investors reassessed growth expectations. Analysts note that although structural demand drivers such as AI, cloud, and cybersecurity remain intact, near-term revenue growth could stay modest.
“Visibility on large deal ramp-ups is still limited, and that is keeping investors on the sidelines,” said a brokerage note.
Valuation Concerns Resurface
Valuations have also become a point of concern. Despite the recent correction over the past year, some IT stocks continue to trade above their long-term average multiples, especially mid-cap names. The recent bounce pushed valuations slightly higher, prompting investors to turn selective.
Large-cap stocks like Infosys and Wipro are considered relatively defensive within the sector, but even these names are not immune to broader sectoral sell-offs when sentiment turns negative.
Earnings Season Hangover
The recent quarterly earnings season did little to provide a strong directional trigger for IT stocks. While most companies met expectations, management commentaries remained cautious, with limited optimism on near-term growth.
Guidance from major players pointed to gradual improvement rather than a sharp rebound, which has dampened enthusiasm among investors looking for quicker returns.
What Lies Ahead for IT Stocks
Despite the current decline, market experts believe that the long-term outlook for Indian IT remains positive. Structural trends such as digitalisation, artificial intelligence adoption, and increased focus on automation continue to offer growth opportunities.
However, in the short term, IT stocks may remain range-bound, reacting to global macroeconomic data, currency movements, and commentary from US clients. Investors are advised to remain selective, focusing on companies with strong balance sheets, diversified client bases, and clear growth strategies.
For now, the day’s decline serves as a reminder that volatility is likely to persist in the IT sector, and rallies may be met with intermittent profit booking until there is clearer evidence of a sustained demand recovery.
Summary
Indian IT stocks fell up to 3% as investors booked profits after a brief rally, amid global uncertainty, cautious demand outlook, valuation concerns, and weak cues from US technology markets.