Nifty IT Crash: Top 10 tech firms including TCS, Infosys, Wipro bleed Rs 1.68 lakh crore in mcap – Should you buy dip?

Indian information technology (IT) stocks extended their decline for a second straight session, with the Nifty IT tumbling 1,934.95 points or 5.51 per cent to close at 33,160.20 on Thursday after hitting an intraday low of 33,058.20.

The selling pressure continued on Friday as the index fell another 4.77 per cent to 31,580.05. Heavyweight stocks led the losses, with Infosys dropping 6.12 per cent, TCS declining 4.79 per cent, and HCL Technologies slipping 4.48 per cent.

Coforge fell 5.59 per cent, while Wipro, LTIMindtree, Persistent Systems, Mphasis and Tech Mahindra also ended lower.

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The broader Nifty MS IT Telecom declined 3.23 per cent to 9,009.25, with mid- and small-cap counters such as KPIT Technologies and Birlasoft plunging sharply.

Analysts attributed the broad-based fall to rising concerns over artificial intelligence-led disruption and cautious investor sentiment around the impact of AI on traditional IT service models.

Heavy Market Capitalisation Erosion

Leading IT companies saw significant erosion in market capitalisation on Thursday. Tata Consultancy Services Limited (TCS) lost Rs 61,337 crore, down 5.83 per cent. Infosys Limited fell Rs 35,505 crore, or 5.95 per cent. HCL Technologies Limited saw a decline of Rs 22,149 crore, down 5.26 per cent.

Other major IT firms were also under pressure. Wipro Limited’s market cap fell by Rs 11,610 crore, or 4.82 per cent. LTIMindtree Limited dropped Rs 9,792 crore, down 5.99 per cent, and Tech Mahindra Limited slipped Rs 10,231 crore, a decline of 6.39 per cent.

Among smaller players, Persistent Systems Limited’s market cap eroded by Rs 4,171 crore, down 4.62 per cent. MphasiS Limited declined Rs 2,434 crore, or 4.93 per cent. Oracle Financial Services Software Limited lost Rs 4,008 crore, down 6.38 per cent, while Coforge Limited fell Rs 3,384 crore, a decline of 6.63 per cent. Overall, these ten Nifty IT stocks together lost around Rs 1,68,621 crore in market capitalisation during the session.

Nifty IT Divergence With Broader Market

The Indian IT sector has underperformed the broader market over recent periods. In the past week, Nifty IT fell 8.25 per cent, while Nifty 50 rose 0.64 per cent. Over one month, Nifty IT dropped 12.71 per cent, compared with a marginal 0.07 per cent gain in Nifty 50.

Over three months, Nifty IT declined 10.03 per cent, while Nifty 50 fell 0.27 per cent. Over six months, Nifty IT slipped 4.37 per cent, compared with a 5.39 per cent rise in Nifty 50. Year-to-date, Nifty IT is down 13.13 per cent, while Nifty 50 has fallen 1.30 per cent.

Over the past year, Nifty IT declined 20.54 per cent, while Nifty 50 gained 11.98 per cent. In the past three years, Nifty IT rose 7.42 per cent compared with a 44.53 per cent increase in Nifty 50. Over five years, Nifty IT gained 27.08 per cent, while Nifty 50 advanced 70.20 per cent.

Expert Views on AI and IT Stocks

Global investment bank JP Morgan said AI fears are driving a sharp correction in IT stocks. The report highlighted that IT firms continue to act as the "plumbers" of the technology world. Advances such as Claude Code’s Cowork plugin and agentic AI tools could accelerate complex software tasks, creating new areas of work.

JP Morgan added that AI could serve as a productivity tool for IT firms, much like offshore labour, enterprise software, and cloud services did in the past. The bank’s analysis indicated that current stock prices already assume a modest 4 per cent terminal growth. Only in extreme scenarios of zero growth would further downside exceed 30 per cent, which appears unlikely given emerging AI work streams and a possible cyclical recovery.

The bank recommended a barbell approach for investors, suggesting buying deep-value large-cap stocks. It highlighted overweight positions in Infosys, TCS, Persistent Systems, and Sagility. Free cash flow and dividend yields are currently at levels last seen during major market dislocations such as the Global Financial Crisis and COVID-19.

What Should Investors Do?

JP Morgan said the sharp fall in IT stocks could offer buying opportunities for long-term investors. While AI concerns have caused short-term volatility, the fundamentals of large IT firms remain strong. Investors looking at deep-value stocks may consider selective buying in top companies with stable cash flows and high dividend yields.

Caution is advised for short-term investors, as market sentiment around AI developments may continue to create volatility. Brokerages suggested monitoring quarterly results and partnerships related to AI adoption for clarity on growth prospects.

Zee Business Managing Editor Anil Singhvi advised investors not to rush into IT stocks. “Do not buy just because stocks have fallen. There is no hurry,” he said.

He added that long-term investors may consider buying large IT companies when dividend yields reach 5 to 6 per cent. “At that level, they may become attractive,” Singhvi said. He further advised remaining selective and avoiding aggressive buying in the IT sector until valuations improve.