Dalal Street witnessed a sharp selloff in IT stocks on Thursday, with theNifty IT index falling 4.67%by noon to hit a four-month low. The decline erased nearly₹1.3 lakh crorein combined market value in a single session. The Sensex IT pack also fell around 5%, signalling broad-based weakness among both large-cap and mid-cap software exporters.
Leading IT firms were hit hard:
Tata Consultancy Services (TCS): down 4.78%
Infosys: down 4.90%
Wipro: down 4.80%
HCL TechnologiesandTech Mahindra: 3–4% decline
Mid-cap firms faced steeper losses:Coforge fell ~6%,LTIMindtree dropped 5%, andPersistent Systems slipped ~5%.
The selloff comes amid a global AI stock rally, which has widened the valuation gap between traditional IT services companies and firms directly leveraging AI. According toKranthi Bathini, Equity Strategist at WealthMills Securities, Indian IT companies have limited direct AI exposure and have been slower to adapt to emerging AI technologies.
“Somewhere they are at a slow pace and have been behind the new technologies like AI. It is one of the key concern areas,” Bathini noted.
Despite the sharp correction, some valuation comfort exists for long-term investors. However, uncertainty persists due to AI disruption and the US economic outlook. Bathini recommends a contrarian approach for medium- to long-term investors, stressing that adaptation to AI and business model changes will be crucial.
AI adoption could create short-term margin pressures due to productivity gains affecting billing, but firms that upskill their workforce and adjust business models effectively could convert AI into a revenue advantage. Structural and cyclical factors, including US tech budgets, will influence the recovery trajectory.
Investors with atwo- to three-year horizonmay view this correction as a staggered buying opportunity. Large-cap IT firms with strong fundamentals and resilient track records could benefit if they embrace AI and adapt strategically.
The current fall highlights market nervousness around AI disruption and global tech weakness. How India’s IT giants respond to AI adoption will likely determine whether this correction is temporary or signals a deeper structural re-rating.