Bloodbath For IT Stocks? - Nifty IT Declines 32% From Its Record Peak; What Lies Ahead

Top IT stock such as TCS, Wipro, and Infosys among others were trading in red on Monday, February 16, marking the fourth consecutive session of losses for this sectoral index amid rising concerns over AI tools disrupting traditional application development.

In early trade, Nifty IT index declined as much as 1.1% in intra-day trade today. This also marked the biggest decline since the 2008 economic crisis. The index hit its lifetime high of over 41,500 level in December last year.

Why Has The Nifty IT Index Declined 15% In 2026?

After having corrected nearly 30 from its peak, IT stocks are declining "due to concerns that AI tools could disrupt traditional application development, testing, and maintenance services," according to ICICI Direct report.  The sell-off is not driven by immediate earnings downgrades but by medium-term structural concerns.

"Several IT stocks are trading below long-term average valuations, suggesting that disruption risks may already be priced in to some extent," it noted.

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From TCS To Infosys: IT Shares Movement Today

The mega IT companies were largely trading in red, signalling pressure across this sector. While Infosys is trading below its long-term historical average, declined as much as 2.24%, Wipro plunged 1.85%. Meanwhile, Tech Mahindra declined as much as 2.17%. TCS is also trading at a notable discount to its 10-year median PE.

The other IT shares such as HCL Tech, Mphasis, and LTMindtree were also trading in red. However, companies such as Oracle Financial Services Software Ltd, Persistent, and Coforge were trading in green.

IT Sector Outlook 2026

The IT sector is undergoing a "structural transition driven by AI, workforce rationalisation, productivity shifts, and valuation re-adjustment," according to ICICI Direct.

At the same time the "correction magnitude is near historical averages, valuations are below long-term averages, and selective positioning remains constructive."

The focus going forward remains on AI capability building digital services strength balance sheet resilience, it noted.