The market hit record highs, while IT stocks crashed. Why did Infosys and other stocks, including HCL Tech, fall? 2 key reasons.:Amidst the ongoing bullish trend in the market, global brokerage firm CLSA has released a report on IT stocks

News Topical, Digital Desk : The Indian stock market hit another record high on January 5, with the benchmark Nifty50 index touching a historic high of 26,373. However, this rally was not supported by IT stocks, which fell more than 2 percent on Monday. Several stocks, including Infosys, Wipro, HCL Tech, TCS, and Persistent Systems, were among the losers.

This decline in IT stocks follows a report by global brokerage firm CLSA, in which analysts cautioned investors against IT stocks. Let's explore what CLSA said in this report.

Why did IT shares fall after the CLSA report?

Global brokerage firm CLSA issued a cautionary note on IT stocks, advising investors to reduce their positions as upcoming Q3 FY26 results are expected to be weak. Following this, selling pressure dominated several stocks, including Infosys, Wipro, HCL Tech, Persistent Systems, and TCS.

According to a CNBC-TV18 report, CLSA said in its latest note that the Nifty IT index has recently outperformed the broader Nifty index, pushing valuations closer to fair levels and limiting the potential for a short-term upside. These two factors have increased pressure on IT stocks.

CLSA reduced target price

The international brokerage has downgraded its rating on HCLTech shares to 'hold' from 'outperform', and cut its rating on Tech Mahindra to 'outperform' from 'high conviction outperform'.

CLSA has also removed Tech Mahindra from its 'focus list', noting that the company's revenue growth recovery over the past 18 months has not been in line with its own estimates or Street expectations.

It also said that HCL Technologies is currently trading at a valuation premium of around 5 per cent compared to other companies like TCS and Infosys.

CLSA likes Persistent Systems and Coforge among mid-cap IT stocks, while Infosys and Tech Mahindra remain its favourite stock picks in the large-cap segment.