Indian IT stocks remained under pressure on September 22, with the Nifty IT index declining 1.5 percent to 28,366.7 around 10:50 am, extending its fall for a third consecutive session. Most constituents of the index traded lower, with LTIMindtree, HCLTech and Mphasis leading the losses.

LTIMindtree fell around 4 percent, while HCLTech and Mphasis declined 2.7 percent and 1.7 percent, respectively. Oracle Financial Services Software was the only index constituent trading higher at the time, gaining more than 1 percent after recovering from a sharp decline in the previous session.

CLSA said management commentary from Indian IT companies ahead of the September quarter results silent period remained cautious, pointing to subdued demand conditions. The brokerage highlighted weak macroeconomic fundamentals, including geopolitical uncertainty, higher interest rates and inflation, as factors that could weigh on technology spending and earnings.

CLSA said discretionary demand remains muted, creating additional earnings downside risk particularly for Infosys and Wipro. TCS has also maintained a cautious stance, while HCLTech's demand commentary has remained comparatively resilient, according to the brokerage.

The brokerage also noted that order books and employee headcount are expected to remain broadly stable, limiting the immediate impact of artificial intelligence adoption on new deal activity and IT employment. The BFSI vertical continues to show relatively resilient demand, providing some support to the sector.

The latest weakness comes against a broader period of pressure for Indian IT stocks, as investors assess slower demand growth, pricing pressure, artificial intelligence related changes and uncertain global macroeconomic conditions. CLSA had previously turned cautious on several large IT companies, citing the transition in traditional IT services and limited near term demand visibility.