IT stocks selloff: The selloff in IT stocks showed no signs of abating as the index declined for the fifth day in a row on Tuesday, February 24, amid persistent fears of AI-driven disruption.
The Nifty IT index tanked 3.5% to a fresh 52-week low of 30,417.75, taking the month-to-date decline to 20%. As of yesterday’s close, the IT pack has lost ₹5.05 lakh crore in market capitalisation, according to Capitaline data.
All Nifty IT constituents traded in the red, falling as much as 4%. Persistent Systems, HCL Technologies and Coforge shares were the biggest losers, down over 4% each. Meanwhile, Infosys’ share price declined 3.7%, TCS’ shares 3.5% and Wipro’s stock 2.9%.
Amid persistent fears of AI-led disruption, IT stocks have cracked up to 24% in a month.
Why are IT stocks falling?
Selling pressure in IT stocks began earlier this month following the launch of Anthropic’s Claude, which is seen disrupting several industries, including India’s tech services sector.
On Monday, Anthropic announced that Claude Code can help modernise COBOL, a programming language mainly run on IBM computers, prompting a selloff in US stocks. Traders were seen dumping shares of most companies facing the risk of being displaced by AI.
Moreover, worries that companies like Alphabet and Amazon may be spending so much on Nvidia’s chips that they’ll never be able to recoup their investments through higher productivity and future profits.
HSBC Global Investment Research was quoted as saying by Reuters that there could be a 14%-16% gross deflationary risk from AI over the next few years to the overall IT sector revenues.
Jefferies recently downgraded six IT software companies, including TCS and Infosys, on concerns about likely structural changes to the business due to AI tools. The brokerage cautioned investors that under a worst-case disruption scenario, sector valuations could decline by an additional 30–65% from current levels.
Jefferies believes that going ahead, stock performance will more likely be tied to the longer-term business outlook rather than earnings delivery in the near term.
It has slashed its earnings projections by 1–4% and now expects about 6% earnings CAGR for large-cap IT companies over FY26–28, with its EPS estimates sitting 3–14% below market consensus.
Global brokerage CLSA also cut its price target on eight IT stocks, namely Coforge, HCLTech, Infosys, LTIMindtree, Persistent Systems, TCS, Tech Mahindra & Wipro, according to a CNBC TV-18 report, as it sees another 5-10% downside amid lack of market share gains.
“Assuming 2% rupee depreciation each year, 5% terminal growth implies no market share gains,” CLSA was quoted as saying by the business news channel.
Nifty IT: Tech view
Sachin Gupta, VP – Research at Choice Broking, said that the Nifty IT index slipped into a clear bearish phase in February 2026 after correcting nearly 21%. The decline gathered pace when the index broke down from a Head and Shoulders pattern on the weekly chart — a classic signal of a structural trend reversal, he said.
“The fall dragged the index below its crucial 10-month low of 30,918, confirming that the broader trend has turned weak. From a technical standpoint, the picture has deteriorated further. The index has breached the important 61.8% Fibonacci retracement level (Golden Ratio) and witnessed a negative crossover of key moving averages, commonly known as a Death Cross. This suggests that the earlier “buy on dips” approach has now shifted to a “sell on rise” strategy,” according to the expert.
With the index struggling to sustain even short-term pullbacks, the technical structure points to further downside toward the 29,300–28,700 support zone. A meaningful recovery is unlikely unless a strong global trigger — particularly stability in the Nasdaq — helps improve overall sentiment, he opined.
Disclaimer: This story is for educational purposes. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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