Nifty IT slumps 5.5% as AI concerns hit stocks; top 10 IT firms lose Rs 1.69 lakh crore in mcap

The Nifty IT index witnessed a sharp decline on Thursday, reflecting sustained pressure on information technology stocks amid rising concerns over artificial intelligence (AI)-led disruption and cautious investor sentiment.

The Nifty IT index fell 1,934.95 points, or 5.51 per cent, to close at 33,160.20. It opened at 34,439.00, touched an intraday high of 34,488.80 and slipped to a low of 33,058.20, indicating persistent selling pressure throughout the session.

The sharp fall in the IT pack came even as the broader market showed relative resilience. The Nifty had recently touched the 26,000 mark, while Bank Nifty is hovering near life highs. However, market expert Anil Singhvi said the broader sentiment remains cautious and stock-specific.

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“Usually, after triggers play out, markets move higher. This time, despite triggers, the market has turned cold,” Singhvi said.

Market Capitalisation Erosion in Top IT Firms

Heavy selling was seen across frontline IT companies, leading to a significant erosion in market capitalisation. Tata Consultancy Services Limited saw its market cap drop by Rs 61,337 crore, a decline of 5.83 per cent.

Infosys Limited declined by Rs 35,505 crore, down 5.95 per cent, while HCL Technologies Limited lost Rs 22,149 crore, a fall of 5.26 per cent.

Wipro Limited’s market capitalisation fell by Rs 11,610 crore, or 4.82 per cent. LTIMindtree Limited declined 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.

Other stocks in the sector also witnessed losses. Persistent Systems Limited saw its market cap erode by Rs 4,171 crore, down 4.62 per cent. MphasiS Limited fell Rs 2,434 crore, a drop of 4.93 per cent. Oracle Financial Services Software Limited lost Rs 4,008 crore, down 6.38 per cent, while Coforge Limited declined Rs 3,384 crore, or 6.63 per cent.

Overall, these ten Nifty IT stocks together lost approximately Rs 1,68,621 crore in market capitalisation during the session.

Nifty IT Index Divergence With Broader Market

The Indian IT sector has underperformed sharply compared with the broader market in recent periods. Over the past week, Nifty IT fell 8.25 per cent, while Nifty 50 rose 0.64 per cent.

Across various timeframes, the divergence has widened. In one month, Nifty IT dropped 12.71 per cent, against a marginal 0.07 per cent gain in Nifty 50. Over three months, Nifty IT declined 10.03 per cent, while Nifty 50 was down 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. On a year-to-date basis, Nifty IT is down 13.13 per cent, while Nifty 50 has declined 1.30 per cent.

Over the past year, Nifty IT has fallen 20.54 per cent, while Nifty 50 gained 11.98 per cent. Over three years, Nifty IT is up 7.42 per cent compared with a 44.53 per cent rise in Nifty 50. Over five years, Nifty IT has gained 27.08 per cent, while Nifty 50 has advanced 70.20 per cent.

AI Concerns Impact IT Stocks

Singhvi said AI has emerged as a major overhang for Indian IT companies. “I had said at the start of the year that IT stocks may not perform well because challenges are high. Now AI is becoming a big development,” he said.

He referred to a recent announcement by global AI firm Anthropic, which indicated that it is developing coding systems that may reduce the need for software developers. According to Singhvi, this triggered fears about a potential impact on IT company revenues.

“When they said they are developing coding systems that may reduce the need for software developers, markets feared IT company revenues could fall significantly,” he said.

He added that Infosys and Wipro ADRs fell 4–5 per cent in the US following AI-related concerns. “There was no other reason for such a fall. It is the fear of AI disruption,” he said.

Singhvi said the impact of AI is now being seen beyond IT services. He noted that developments in AI-based online insurance models have raised concerns for insurance intermediaries and digital platforms.

“The moment it was said that AI can handle online insurance directly, stocks like PB Fintech saw sharp reactions,” he said.

Investment Strategy Amid IT Volatility

On investment strategy, Singhvi advised caution. “Do not rush to buy just because stocks have fallen. There is no hurry,” he said. He suggested that long-term investors may consider buying large IT companies only when dividend yields reach 5 to 6 per cent. “Consider buying large IT companies only when the dividend yield reaches 5 to 6 per cent. At that level, they may become attractive,” Singhvi said.

He added that investors should remain selective and avoid aggressive buying in the IT space until valuations become more favourable.