IT stocks traded lower on Monday, following a sharp sell-off in the Indian stock market. The Nifty IT index declined more than 2%, with most of its constituents slipping in the red.
HCL Technologies, Tata Consultancy Services (TCS), Persistent Systems, Infosys and Wipro were the top losers in the Nifty IT index, falling over 1% each. On the contrary, Coforge and Mphasis were the only gainers in the index.
The fall in IT stocks came as the Indian stock market crashed amid weak global market cues. The frontline indices, Sensex and Nifty 50 dropped over 1.5% each.
The fall in the Indian stock market today came amid renewed escalating geopolitical tensions as earlier optimism surrounding the temporary ceasefire in the Middle East faded after US–Iran talks collapsed over the weekend, raising fears of a prolonged conflict and potential supply disruptions.
A sharp rise in crude oil prices above the $104 per barrel mark has been the key driver behind the risk-off sentiment, triggering broad-based selling across the market.
Indian IT stocks have come under sustained selling pressure recently following the launch of advanced models by GenAI platforms such as Claude and Palantir. This has heightened concerns over potential disruption to traditional SaaS and IT services business models. As a result, the Nifty IT index has declined by 19% so far in 2026.
IT stocks have come under renewed pressure, with fresh concerns around earnings compounding already elevated fears of AI-led disruption.
The Nifty IT index declined nearly 20% in February amid a global sell-off in technology stocks, triggered by concerns that AI start-ups — particularly following developments from Anthropic — could disrupt traditional IT services. The apprehension is that AI-driven automation may reduce demand for outsourcing by streamlining coding and enterprise functions.
The latest leg of the sell-off is being driven by emerging signs of a slowdown. TCS Q4 results showed a decline in dollar revenue despite a stronger dollar, indicating weaker client spending. This has reinforced concerns that AI-led disruption may already be weighing on growth prospects for legacy IT firms.
Investors will now focus on the IT sector earnings, with TCS Q4 results already out last week, signalling weak sentiment.
IT Sector Q4 Results
Analysts expect the operating performance of IT services companies to remain subdued in the quarter ended March, as the fourth quarter is typically seasonally weak due to a lower number of working days.
There has been a modest improvement in discretionary technology spending within the BFSI and Technology verticals. However, segments such as Manufacturing, Automotive, and Communications continue to exhibit weakness.
Additionally, concerns persist over the potential adverse impact of automation tools developed by Anthropic on the business models of Indian IT firms. Clients remain cautious regarding AI adoption, resulting in elongated decision-making cycles.
According to HDFC Securities, the Indian IT services sector braces for another muted quarter in Q4FY26E, with tier-1 players projected to see a growth of -1.1 to +0.9% QoQ CC and mid-tier companies ranging growth from -1.8% to +3.4%, as macro uncertainty, ongoing geopolitical tensions, and cautious client decision-making on large deals amid war escalation risks temper nearterm revenue traction.
The rupee depreciation brings some respite to margins, but AI-led deflation concerns triggered the recent multiple de-rating.
Disclaimer: 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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