The misery of Indian IT companies deepened on Tuesday after a report by US firm Citrini Research fuelled fresh fears about their fortunes. The report flagged major concerns over job losses and AI-led disruptions in consumption-driven economies, rattling investors globally.
The Nifty IT Index plunged 4.74% (or 1,497 points) to close at 30,053.50 — its lowest level in 30 months (since August 3, 2023). Tuesday’s decline marked the third major fall (over 4.5%) for the IT gauge in less than a month. The index has now entered bear-market territory, having declined 22% since the launch of Anthropic’s AI tools on February 4.
Rout in IT stocks
The rout in IT stocks dragged benchmark indices lower. The Sensex slumped 1,068.74 points (or 1.28%) to close at 82,225.92, while the Nifty fell 288.35 points (or 1.12%) to 25,424.65. Investors were poorer by Rs 3.55 lakh crore as total market capitalisation on the BSE declined to Rs 465.64 lakh crore.
Citrini’s report outlined a scenario in which firms including TCS, Infosys and Wipro would see an acceleration in contract cancellations through 2027. It also said that the rupee fell 18% against the dollar in four months as the services surplus that had anchored India’s external accounts evaporated. By Q1 2028, the IMF had begun “preliminary discussions” with New Delhi.
The IT index rout began on February 4, when Anthropic launched its new AI tools, widely viewed as a potential threat to the existing business models of IT and SaaS companies.
Since then, the top 10 Indian software majors have collectively lost nearly Rs 7 lakh crore in market capitalisation, including Rs 1.18 lakh crore wiped out on Tuesday alone. The IT index’s 21% drop in February represents its steepest monthly decline in 23 years, the worst since April 2003.
What do market analysts say?
“Markets are reacting to a confluence of uncertainties—from knee-jerk fears of AI-led job losses to tariff confusion and unresolved geopolitical tensions. Investors dislike ambiguity, and right now, there’s plenty of it,” said Ambareesh Baliga, market analyst.
Baliga added that despite near-term volatility, he does not see long-term negative triggers. Earnings are improving quarter after quarter, and the strategy is clear—buy on major dips, sell into euphoria, and play the volatility rather than fear it.
“Global uncertainty and persistent concerns around AI-led disruption continued to weigh on market sentiment, keeping volatility elevated on D-Street,” said Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services.
The monthly expiry of Nifty derivatives further added to intraday volatility, with markets reacting to a combination of weak global cues and sector-specific pressures, Khemka added.
Out of the 10 Nifty IT constituents, barring two, all stocks have fallen more than 20% since February 4. Coforge (down 29.2%), Persistent Systems (down 25.75%), and LTIMindtree (down 25.53%) were the top losers in percentage terms.
TCS, with an erosion of Rs 2.36 lakh crore, led the market-cap losses, followed by Infosys (down Rs 1.71 lakh crore) and HCL Tech (down Rs 96,634 crore).
Foreign portfolio investors sold shares worth Rs 102.53 crore and domestic institutional investors bought shares worth Rs 3,161.22 crore, as per provisional data by the BSE.
Market breadth remained negative, with 2,889 losers against 1,344 gainers on the BSE. The broader BSE Midcap and BSE Smallcap indices declined 0.42% and 0.90%, respectively, but outperformed the benchmarks.
Besides IT, realty, telecom, financial services, and private banks were among the top sectoral laggards, while metal, oil & gas, PSU banks, pharma, and healthcare emerged as the top gainers.
Tech Mahindra, HCL Tech, Eternal, Infosys, and TCS were the top Sensex losers, falling by up to 6.60%. On the other hand, NTPC, HUL, Tata Steel, Titan Company, and Power Grid were the top gainers, rising by up to 1.94%.