IT stocks came under heavy selling pressure on Thursday in line with Wall Street peers. The Nifty IT index declined sharply by 5.5 per cent as investor concerns mounted over the potential impact of artificial intelligence-led disruption on software services earnings, as the new advanced AI models could automate several traditional IT services, potentially impacting future business growth.

Major IT names led the decline, with Infosys,Wipro, TCS, Coforge and HCL Tech among the top losers on the index.

Heavyweight Infosys ended 6 per cent lower at ₹1,386. TCS settled 5.49 per cent lower at ₹2,750.10 after hitting a 52-week low of ₹2,740. Wipro also hit a 52-week low of ₹218.50 before closing 4.67 per cent lower at ₹219.08.

Coforge fell 6.50 per cent to ₹1,421.50, Tech Mahindra depreciated 6 per cent to ₹1,536.60, and HCL Tech were down 5 per cent to ₹1,476.10.

AI concerns

Amidst AI threat, Nifty IT index crashed over 13 per cent YTD. IT majors such as TCS, Infosys lost over 15 per cent YTD, while Wipro fared poor by falling over 18 per cent. Tech Mahindra was better with 5 per cent drop.

Market participants said the drop was driven by intensifying fears that AI-driven automation could pressure billing rates and reduce demand for certain service lines, potentially weighing on medium-term revenue visibility. Concerns have also surfaced around increased investments required to adapt to evolving technologies, which may impact margins.

Reports that the Trump administration is expanding in an effort to revoke the US citizenship for foreign-born Americans as it works to curb immigration, also spooked sentiment, as Indian IT majors employ them as well.

The sell-off comes amid broader global debates over the pace at which generative AI and automation tools are being adopted by enterprises, prompting investors to reassess growth assumptions for IT service providers. While companies have highlighted opportunities in AI-led transformation deals, the near-term uncertainty has led to cautious sentiment in the market.

Globally, AI is reshaping markets by compressing margins in service-intensive sectors and increasing concentration-led volatility. In India, this technology shift is likely to structurally transform IT services by accelerating delivery timelines and automating volume-driven tasks, thereby challenging the traditional headcount-based outsourcing model,  Vinod Nair, Head of Research, Geojit Investments, said.

Echoing broader macroeconomic concerns, Siddhartha Khemka, Head of Research for Wealth Management at Motilal Oswal Financial Services Ltd, said the decline in IT stocks was largely due to diminishing expectations of a near-term rate cut by the US Federal Reserve following stronger-than-expected January employment data. It had also impacted Wall Street tech giants.

Last week, the stocks witnessed significant pressure due to Anthropic’s launch of the Claude chatbot.

Analysts expect volatility in IT stocks to persist as investors track deal pipelines, spending trends in key markets and management commentary on AI adoption strategies. For now, the sector remains under pressure as the market recalibrates expectations around the evolving technology landscape.

However, the weaknes could be an overreaction.

The RSI across the sector is in oversold territory, suggesting the possibility of a technical bounce; however, the broader trend remains negative. Any recovery towards resistance zones is likely to face selling pressure. In the near term, a cautious approach is advised, with a preference for a sell-on-rise strategy until the index regains strength above critical resistance levels, Bonanza analyst Drumil Vithlani vsaid.

According to Dr. Ravi Singh, Chief Research Officer at Master Capital Services, investors are still factoring in legitimate concerns about slower growth, pricing power and margin pressure as automation increases. Singh said the recent weakness should be seen more as a valuation reset than a structural breakdown, advising long-term investors to selectively accumulate quality names in phases, while short-term traders wait for clearer signs of stability before taking positions.

Key stocks such as Wipro and Tech Mahindra traded below important support levels, reflecting weak momentum, according to Drumil Vithlani, Technical Analyst at Bonanza.

Published on February 12, 2026