IT Stocks Suffer Heavy Losses as Indian Market Selloff Continues

Indian IT Stocks Continue to Decline

The Indian IT sector experienced a sharp decline on Monday, following a sell-off in the Indian stock market. The Nifty IT index plummeted more than 2%, with most of its constituents slipping into the red. The top losers in the Nifty IT index were HCL Technologies, Tata Consultancy Services (TCS), Persistent Systems, Infosys, and Wipro, each falling over 1%. In contrast, Coforge and Mphasis were the only gainers in the index.

The decline in IT stocks was attributed to the Indian stock market's crash, which was fueled by weak global market cues. The frontline indices, Sensex and Nifty 50, dropped over 1.5% each. The fall in the Indian stock market was exacerbated by renewed escalating geopolitical tensions, as earlier optimism surrounding the temporary ceasefire in the Middle East faded after US-Iran talks collapsed over the weekend. This raised fears of a prolonged conflict and potential supply disruptions, contributing to a risk-off sentiment.

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.

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Investors will now focus on the IT sector earnings, with TCS Q4 results already out last week, signaling weak sentiment. 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.

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%. The rupee depreciation brings some respite to margins, but AI-led deflation concerns triggered the recent multiple de-rating.