The Indian IT sector opened on a weak note for the second consecutive session, with all stocks in the Nifty IT index trading in the red at early trade, underscoring broad-based selling pressure that has dominated the segment. Major names like Infosys, Tata Consultancy Services, Tech Mahindra, HCLTech, Wipro, LTIMindtree, Coforge, Mphasis and others saw sharp declines, as investor confidence continued to erode. Analysts noted there was no countertrend strength in the pack, indicating that the weakness was widespread and entrenched.
A significant contributor to the selloff has been recent quarterly results from IT companies, which revealed revenue growth but shrinking profits due to unexpected one-time costs. This mixed earnings outcome jolted investors, who reacted negatively to the profit impact even though top-line numbers were solid.
More fundamentally, concerns are mounting that clients in the US and Europe are reassessing technology spending priorities, especially given the rapid rise of artificial intelligence tools that can automate many tasks at lower cost. This potential shift threatens the traditional outsourcing and services business model that underpins Indian IT companies’ growth, making future revenue streams less certain.
The broader macroeconomic landscape has intensified the pressure. Rising geopolitical tensions — particularly between the United States and Iran — have pushed global markets into risk-off mode, leading to cautious behavior from corporate clients abroad who may delay or reduce technology projects. Since Indian IT firms depend heavily on overseas clients, even modest hesitation abroad can have immediate repercussions on Dalal Street.
Foreign Portfolio Investors (FPIs) have also been reducing their holdings in the IT sector, with roughly ₹11,000 crore pulled out in the first half of February amid fears that advances in AI could permanently alter demand dynamics. This sustained selling has dropped FPI investment in IT stocks to its lowest level in years and compounded downside pressure.
Despite the short-term turmoil, long-term prospects may still hold promise as major players continue to invest in AI, automation and digital transformation initiatives to stay competitive. However, for now, markets are reacting to heightened uncertainty — with Nifty IT’s decline capturing the sentiment perfectly.
