Midcap information technology stocks came under significant pressure as the broader sector sell-off deepened, intensifying debate over whether elevated valuations in several companies can be sustained amid shifting industry dynamics.
The decline tracked weakness in the benchmark Nifty IT index, which extended losses from the previous session and dropped more than 5 per cent during the day to a low of 31,422.60 from its previous close of 33,160.20.
Since February 2026, the index has corrected about 18.6 per cent from its high of 38,611.75, with heavyweight constituents including Tata Consultancy Services, Infosys and HCLTech acting as major drags.
The sell-off gathered pace after Anthropic unveiled a new artificial intelligence tool capable of automating complex tasks, stoking concerns about potential structural disruption to the outsourcing business model that has long supported growth across the IT services industry.
Amid this backdrop, midcap technology names with relatively high price-to-earnings multiples drew heightened scrutiny. Shares of Tata Elxsi declined more than 12 per cent over the past week to a low of ₹4,955.50, with its P/E multiple moving above 50.
Tata Technologies fell about 11 per cent to ₹575.30, trading at a multiple near 50, while Persistent Systems slipped 12.5 per cent to a low of ₹5,210.
Other richly valued names – with PE multiples above the 30–40 range – also saw sharp corrections. Coforge plunged 17 per cent to ₹1,334, Happiest Minds Technologies declined more than 9 per cent to ₹365, and KPIT Technologies dropped over 18 per cent to ₹812.90. Meanwhile, L&T Technology Services slid 11 per cent to ₹3,495.40.
The steep declines have drawn attention to the premium valuations that midcap IT firms command compared with larger peers.
Even after this correction Tata Elxsi, Tata Technologies, Persistent Systems trade at trailing PEs in the range of 45-55 times, which are lofty by any standards and especially in the current context as investors reassess growth assumptions and questions are raised on how their current business model can get upended by AI.
Meanwhile, large-cap stocks with price-to-earnings multiples around the 20 mark also witnessed sharp declines. Shares of Infosys dropped 16 per cent during the week to a low of ₹1,281.50 in today’s trade, while Tata Consultancy Services fell 14 per cent over the past week to touch a low of ₹2,585. Shares of Wipro fell 10 per cent during the week to a low of ₹209.01, with the stock currently trading at a price-to-earnings multiple below 20.
Market participants remain divided on whether strong digital and engineering services demand can justify elevated multiples or whether sustained pressure could lead to further valuation compression in the coming sessions.
Published on February 13, 2026
