A Long-Running Rally That Lost Steam
From the mid-1990s to 2008, India’s CNX IT index, when viewed in US dollar terms, outperformed the NASDAQ 100 (see image below). This strong phase was marked by rapid expansion, global outsourcing demand, and aggressive scaling by Indian IT giants. The sector was a core engine of growth during this period.
The Post-2008 Shift
However, since 2008, the trend has reversed. NASDAQ tech companies have surged ahead, while Indian IT stocks have struggled to maintain pace. In dollar terms, the CNX IT index saw a long phase of sideways movement (see image above) almost two decades of stagnation with no major breakout until the brief surge post-COVID.
A Temporary Resurgence and Back to Flat
While the pandemic briefly reignited momentum in Indian IT stocks, the rally didn’t sustain. After a short post-COVID breakout, the index returned to a sideways pattern. This repeated failure to break out could signal deeper structural issues—possibly maturity or saturation in the Indian IT space.
Is It Just a Pause Or a Red Flag?
Despite global tech booming, Indian IT appears to be lagging, with no clear upward trend. Unless a strong breakout occurs, this could serve as a warning sign. The index’s underperformance raises questions about the future growth potential of India’s leading IT firms, both in relative and absolute terms.
Looking Ahead
If this stagnation continues, investors might need to reassess long-term expectations from the sector. While Indian IT remains fundamentally strong, it may no longer offer the same aggressive growth story it once did—at least in dollar terms.
What do you think? Has the Indian IT growth cycle matured, or is this just a long pause? Drop your thoughts in the comments! And if you found this blog insightful, do SHARE it with your friends.
