CLSA Advises Trimming IT Stock Positions, Downgrades HCLTech & Tech Mahindra

• CLSA recommends reducing exposure to IT stocks after a recent rally, citing soft Q3 FY26 earnings expectations.
• The brokerage downgraded HCL Technologies to 'Hold' and Tech Mahindra to 'Outperform' from previous higher ratings.
• Nifty IT index surged 14% quarter-to-date, outperforming Nifty's 4%, pushing valuations to fair levels.
• Tech Mahindra was removed from CLSA's Focus List due to slower-than-expected revenue growth recovery.
• CLSA favors Persistent Systems and Coforge in mid-caps, and Infosys and Tech Mahindra in large-caps.

Why It Matters: CLSA turns cautious on IT stocks, advises trimming positions due to valuation and soft earnings outlook.