IT Stocks Sink as AI Jitters Erase Over ₹2 Lakh Crore in a Day

Indian IT stocks witnessed a steep selloff on Wednesday, mirroring sharp weakness in global technology markets and heightened concerns around the impact of artificial intelligence on traditional software and IT services models. The selloff wiped out over ₹2 lakh crore in market capitalisation from leading IT companies in a single session, making it one of the sector’s sharpest declines in recent years.

The Nifty IT index fell close to 7% intraday, significantly underperforming the broader market. Selling pressure was broad-based, affecting large-cap as well as mid-cap IT stocks, with investors reassessing growth prospects amid rapid changes in the global technology landscape.

The scale of the decline was reflected in a sharp erosion of market capitalisation across top IT firms:

• Tata Consultancy Services (TCS) lost over ₹70,000 crore in market value, dragging its overall valuation below the ₹11 lakh crore mark
• Infosys saw its market capitalisation shrink by more than ₹50,000 crore
• HCLTech lost close to ₹27,000 crore
• Wipro and Tech Mahindra together shed around ₹20,000 crore
• Mid-cap names such as Persistent Systems and LTIMindtree also fell sharply, amplifying sector-wide losses

In total, the combined market value erosion across major listed IT companies crossed ₹2 lakh crore during the session.

Global Tech Weakness Set the Tone

The fall in Indian IT stocks followed a sharp selloff in global technology and software stocks overnight. US markets, particularly technology-heavy segments, saw significant pressure as investors reduced exposure to software and SaaS companies.

Several global tech stocks declined sharply after fresh developments in artificial intelligence prompted concerns over faster automation of enterprise workflows. This triggered a broader reassessment of earnings visibility and long-term growth assumptions for traditional software and IT services firms. Given the strong linkage between Indian IT companies and overseas technology spending cycles, weakness in US tech markets typically spills over quickly into domestic IT stocks. 

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AI Concerns Add to Selling Pressure

A key factor behind the selloff was rising anxiety around the pace at which artificial intelligence is reshaping enterprise operations. New AI-driven tools are increasingly capable of handling tasks such as data processing, customer support, software testing, and internal analytics, areas that form a significant portion of revenue streams for IT services companies. 

Markets reacted by pricing in the risk that automation could reduce demand for manpower-led outsourcing and consulting services over time. This led to a sharp correction in IT stocks, many of which were trading at premium valuations relative to broader market indices. “The Nifty IT index experienced a sharp decline because investors became increasingly worried about worldwide technology expenditure and advanced AI systems. Foreign investors sold their shares, which created continued selling pressure," said  Piyush Jhunjhunwala, Founder & CEO, Stockify, adding, "The majority of their revenue originates from the United States and European markets, yet Indian IT companies encounter market uncertainty because their clients implement budget restrictions and postpone project approvals due to international trade and policy changes, creating unpredictable conditions.”

Why Indian IT Stocks Are Highly Sensitive?

Indian IT companies remain heavily exposed to global demand conditions:

• More than half of the revenues for large IT firms come from North America
• Client spending decisions are closely linked to global interest rates, corporate tech budgets, and innovation cycles
• Any shift in sentiment around technology spending or software demand tends to have an outsized impact on Indian IT stocks

As a result, global technology selloffs often translate into sharper declines for Indian IT shares compared to domestic-focused sectors. 

“The sector has experienced increased market volatility during the past few weeks because of international market changes, currency fluctuations, and investor behavior, which leads to different risk levels. IT stocks exhibit high-beta characteristics, which result in their prices experiencing stronger market declines during periods of global uncertainty. In the near term, market sentiment is likely to remain fragile, and selective stock-specific movements may dominate,” adds Jhunjhunwala.

Stock Performance:

During Wednesday’s session:

• Infosys, Wipro, HCLTech, and Tech Mahindra declined between 5% and 8%
• TCS fell nearly 6%
• Mid-cap IT stocks dropped as much as 7%, reflecting widespread risk-off sentiment

The sharp decline in IT stocks also weighed on the broader Indian equity market on Wednesday, though losses were relatively contained outside the technology space. The Sensex slipped over 600 points in early trade, while the Nifty 50 fell below the 21,700 mark, dragged primarily by IT heavyweights. Banking, FMCG, and energy stocks showed mixed trends, helping limit deeper losses. Market breadth remained weak, with the number of declining stocks outpacing gainers, reflecting cautious investor sentiment amid global risk-off cues and weakness in overseas markets.

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