Information technology is one of India's largest and most-watched sectors — and it moves on a very different set of forces from a typical domestic company. If you want to understand IT stocks, these are the levers to watch. This is for learning only.
It's a dollar business
Indian IT firms earn the bulk of their revenue in US dollars, serving clients in America and Europe. That has two big consequences: a weaker rupee helps their reported earnings, and their fortunes are tied to the health of the global economy far more than the Indian one. When US and European companies cut technology budgets, Indian IT feels it quickly. (See how currency works in what moves the market.)
The numbers that drive the stocks
- Revenue growth in constant currency — the cleanest measure of real demand, stripping out currency swings.
- Deal wins / order book (TCV) — the value of new contracts signed, which tells you about future revenue.
- Operating margins — IT is a people business, so wage costs and pricing power decide profitability.
- Attrition — the rate at which employees quit. High attrition means rising salary costs and pressure on margins; falling attrition is a good sign.
- Client spending signals — guidance on whether global clients are expanding or freezing tech budgets.
The risks
A global slowdown or recession in the US/Europe hits demand. Currency can swing both ways. Visa and regulatory changes in client countries add uncertainty. And AI is the great double-edged sword — it can automate away some services work, but also create large new demand for building and running AI systems. How each company navigates that shift is now central to the story.
This is a lens for understanding the sector, not advice on any stock. Pair it with the general sector framework, and remember that a hot theme is not a plan — see how to think about a hot sector.
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