Indian tech stocks shares extended losses for a third straight session on Friday, with heavy selling seen across large and midcap names. Fresh concerns around artificial intelligence-led competition, weak global cues, and fears of pressure on core revenue lines dragged the sector lower in early trade.
At the time of writing this report, the Nifty IT index was down nearly 2% at 35620. The index has slipped close to 9% since last week and is headed for its worst weekly showing in more than four months.
Broad-based selling pressure across IT sector
Selling pressure was broad-based rather than limited to a few names.
Coforge shares dropped more than 4% in early trade. Persistent Systems and LTIMindtree were down about 3% each. MphasiS and Tech Mahindra lost over 2%, while heavyweight Tata Consultancy Services and Infosys slipped close to 2%. Wipro and HCLTech declined around 1% each.
3 reasons why are Indian IT stocks under pressure today
1. Weak global tech sentiment adds to the pain
Overnight losses on Wall Street weighed on domestic tech stocks. US technology shares slid sharply after fresh signs of strain in the job market and renewed selling in high-growth names.
The Nasdaq fell 1.6%, while several large technology and software stocks came under pressure as markets questioned rising spending on AI and its payoff timeline. That negative mood spilled into Asian markets, including India, during the early hours.
2. AI tools raise fears of faster automation
The immediate trigger came from fresh developments in artificial intelligence. AI developer Anthropic recently rolled out new plug-ins for its Claude Cowork agent that can automate work across legal, sales, marketing, and data analysis.
This has unsettled markets because many Indian IT companies earn a large share of revenue from application services and professional outsourcing. Traders worry that such tools could reduce the need for large teams doing routine work, cutting billing volumes over time.
Brokerage Jefferies said application services contribute roughly 40 to 70% of topline for most IT firms, and new AI capabilities could eat into that pool sooner than expected, as per various media reports.
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments pointed out that “The selloff in tech and AI stocks and a departure from AI trade would be good for India in the medium-term, but for that further weakening of the AI trade is required. So, watch out for the trend in AI stocks.
3. Dollar Index higher, gold-silver volatile
The otherimportant triggers that impact sentiment include a rebound in the dollar. Though a strong dollar is typically good news for the Indian IT companies and a bulk of their revenue is generated in dollar, However, the tech companies pay most of their expenses i rupee, including employee salary. Big movement in dollar-rupee can mpact margins. Additionally, volatility in silver prices, along with a weak gold rat,e kept investors on edge.
The uniform fall suggests pessimism across the sector rather than company-specific issues.