Analysts caution that the sector’s FY26 earnings recovery could be postponed, urging firms to tighten cost controls, diversify beyond North

Infosys shares fell as much as 3% as Fed rate‑hike worries returned, pulling the stock lower despite a generally rising market and adding pressure to the Indian IT sector, mirroring similar moves in peer stocks.

TCS slipped about 2% in early trade, helping push the Nifty IT index down 1.5%, a sign that investors are wary of higher financing costs and slower AI project pipelines, and may affect upcoming quarterly earnings.

CLSA downgraded the three majors, cutting their target prices by several percentage points and highlighting the Fed outlook and a slowdown in AI‑related contracts as key risk factors, and lowering the firms' price‑to‑earnings expectations.

Analysts caution that the sector’s FY26 earnings recovery could be postponed, urging firms to tighten cost controls, diversify beyond North American clients, and accelerate