The Indian domestic indices are under heavy pressure in today’s trading session, with technology stocks seeing one of the sharpest sell-offs across sectors.
The benchmark indices slipped sharply in intraday trade, with the Sensex falling 1%, while the Nifty dropped below the 23,600 mark or down nearly 1%.
The biggest damage was visible in the IT space. The Nifty IT Index plunged more than 1,000 points in the intraday trading session, falling over 3.6% and slipping below the 28,300 level. All 10 constituents of the Nifty IT index are trading in the red.
“Technology stocks have been under pressure over the past six to eight months, primarily due to muted earnings growth and growing concerns around the impact of AI on future revenue visibility. The ongoing correction is largely a continuation of that trend,” said Sunny Agrawal – Head of Fundamental Research at SBI Securities.
“We are witnessing institutional investors gradually reducing exposure to the IT sector, particularly in tier-1 companies, where growth expectations remain subdued. Current estimates for FY27 suggest revenue growth could remain largely flat or in the range of 3–4%, reflecting a very modest growth outlook for the industry,” he added.
Let’s take a look at the key reasons behind why the tech sector stocks are falling sharply today.
OpenAI’s new push raises fresh AI concerns
Another factor that kept technology stocks under pressure was the growing discussion around artificial intelligence and automation.
On Monday, OpenAI announced the launch of OpenAI Deployment Company with an initial investment of $4 billion. The company said the initiative is aimed at helping organisations deploy AI systems across critical business operations.
The announcement has renewed conversations around how rapidly AI adoption could reshape the global technology services industry.
“So, this announcement that the OpenAI development company is being launched has triggered an immediate sell-off, causing the Nifty IT index to slump. Now everything is moving from headcount billing to maybe outcome-based pricing, so this is not very conducive for Indian IT services companies,” explained Sumit Pokharna, VP – Fundamental Research at Kotak Securities.
The company also said it would deploy specialised engineers to work closely with organisations handling complex operational environments.
“… the rapid emergence of new tools and solutions across various LLM models, there are increasing concerns around a potential deflationary impact on the sector going forward. This combination of weak growth visibility and structural disruption is driving the continued sell-off we have seen over the last several months, including today’s decline,” added Agrawal.
The big concern for tech stocks now: Analyst outlook
“There are a couple of reasons. First is definitely the growth is missing. Even if you look at the Q4 numbers, the numbers were not that impressive, so most of the companies underperformed in IT. Even if you look at the guidance, that is not very encouraging,” said Sumit Pokharna, VP – Fundamental Research at Kotak Securities.
“Plus, there is a lot of deflation risk which is coming because of Artificial Intelligence (AI), and the concerns are multiple out there. Now, on top of it, with the launch of OpenAI development company, which is more of a structural setback to the traditional Indian IT services sector per se,” he added.
“Because what is happening is that it directly targets the headcount-based billing engine, which has been the business model of Indian IT services companies for the last 30 years,” Pokharna said.
Tech stocks saw broad-based selling
The sell-off in IT shares was widespread, with large-cap as well as mid-cap technology companies facing pressure in intraday trade.
Persistent Systems emerged among the biggest losers, falling close to 5%, while Tata Consultancy Services dropped around 4%. Infosys and L&T Technology Services also declined sharply.
Other major names including Tech Mahindra, HCLTech, Wipro, Coforge and Mphasis remained under pressure the intraday trading session.
Rupee weakness adds to the pressure
The sharp fall in the Indian rupee also remained a key trigger behind market nervousness.
The rupee slipped 35 paise to touch a record low of 95.63 against the US dollar amid rising crude oil prices and persistent foreign fund outflows.
Foreign investors continue selling Indian equities
Foreign portfolio investors have also continued to reduce exposure to Indian equities, adding to the weakness in the market.
FPIs have remained net sellers in the cash segment for several months now. Since July last year, they have pulled out nearly Rs 4.5 lakh crore from Indian equities.
Technology stocks are often among the first sectors to see heavy selling during periods of global uncertainty because they are closely linked to global growth and business spending trends.