CLSA Warns of Soft Q3 for IT Sector; Infosys, HCLTech Shares Drop 2%

• CLSA advised investors to trim positions in Indian IT stocks, citing expectations of soft Q3 FY26 earnings.
• Infosys, HCLTech, Wipro, Tech Mahindra, and TCS shares fell after CLSA's cautious note.
• CLSA downgraded HCLTech to 'Hold' and Tech Mahindra to 'Outperform', removing Tech Mahindra from its 'Focus List'.
• The Nifty IT index's recent outperformance has pushed valuations to fair levels, limiting near-term upside.
• CLSA still favors Persistent Systems, Coforge (mid-cap), Infosys, and Tech Mahindra (large-cap) despite sector caution.

Why It Matters: CLSA's cautious outlook on Q3 earnings led to a significant drop in Indian IT stocks.