“While Infosys reported decent numbers, the management expects a muted fourth quarter which led to the slide in the stock,” said Dharmesh Kant, head of research, Cholamandalam Securities.

“Given that Infosys was trading at lofty valuations, the profit booking was expected.”

The stock ended at ₹1,817.50, down 5.8% over the previous trading sessions. The Nifty Information Technology (IT) Index fell 2.7% dragged by the decline in Infosys. Out of the 10 stocks on the Nifty IT, eight declined and two advanced. Wipro shed 2.2% on Friday and TCS shares were down 2%. Tech Mahindra and Persistent Systems fell 1.8% and 1.7%, respectively. LTI Mindtree and Coforge moved over 1% lower.

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Kant said that the management also didn’t seem confident about Donald Trump’s expected policies ahead of his taking office on Monday which fuelled the cautious sentiment.Infosys shares gained 21.2% in 2024, while the Nifty IT Index surged 22.8%. The benchmark Nifty Index gained 9.1% in the same period.The IT major’s profitability is likely to be under pressure this year.

“The two-phase salary hikes are anticipated to impact the margins and around 10% revenue growth for Infosys has been driven by pass-through revenues which is likely to reverse next quarter,” said Anita Gandhi, institutional head, Arihant Capital. “Since IT stocks have witnessed a good run-up ahead of results, we are not extremely bullish as there is a possibility of some uncertainty from a global slowdown going forward.”

Kant said that midcap IT companies are trading at higher valuations than large-cap players, but the approach needs to be stock-specific.