Infosys and other IT stocks slip up to 2% as profit-taking sets in after buyback-fueled rally, Fed caution looms

Infosys and other IT shares fell on Monday as investors booked profits following last week’s 4.3% rally in the sector, which was fueled in part by Infosys’ record Rs 18,000 crore buyback announcement. Caution also rose ahead of the US Federal Reserve’s policy meeting later this week.

The Nifty IT index declined 1% on the day, reversing some of last week’s gains and emerging as the biggest drag on the benchmarks. Infosys shares slipped 1.6% to Rs 1,501.40 on the BSE, giving back part of the 5% jump recorded last week following the buyback announcement.

Infosys, one of India’s largest IT companies, unveiled its fifth share repurchase program on September 12 – the largest in its history. The company plans to buy back up to 10 crore equity shares, or 2.41% of its paid-up capital, at Rs 1,800 per share, representing an 18.1% premium over Friday’s closing price of Rs 1,524.

The record date for eligibility is yet to be announced. Subject to shareholder approval, the buyback will be conducted via the tender route for the first time since its maiden program in 2017; the last three buybacks were executed through the open market. Analysts estimate the program could take three to four months to complete.

The buyback aligns with Infosys’ broader capital allocation strategy of returning 85% of free cash flow to shareholders over FY25–29. In FY25 alone, the company returned 52% of its FCF through dividends.

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Despite the upbeat buzz, profit-taking followed last week’s rally, which had added Rs 33,736.83 crore to Infosys’ market capitalization, lifting it to Rs 6.33 lakh crore.Other IT majors also weakened on the day, with Tata Consultancy Services slipping 1%, while Persistent Systems, HCL Technologies, Coforge, Tech Mahindra, and Wipro declined between 0.7% and 1%.Also read | Explained: What is China’s anti-involution shift and how it impacts Indian stocks

India’s equity benchmarks were largely unchanged on Monday, tracking Asian peers as investors awaited the Fed’s decision amid rising expectations of an interest rate cut. The Nifty had gained 1.5% last week, marking its longest winning streak in a year, driven by optimism over US-India trade talks and government tax measures aimed at boosting consumption.

Nine of 16 major sectoral indices advanced, providing some support, but a pullback in technology shares weighed on overall market sentiment. Analysts said trends in the coming sessions will depend on the Fed’s decision, domestic WPI inflation data, and further developments on the trade front.

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