IT stocks extended losses for a fourth consecutive trading session on Thursday, with the NSE Nifty IT Index declining 2.25% to close at 27,289.20. According to Business Standard, the index hit a 52-week low of 27,078 during intraday trading, marking a significant escalation from previous session lows. The Nifty IT index has declined 7.16% in the current four-session streak, compared to a 3% fall recorded by the Nifty 50. From its April month high, the index has plunged 15% as against a 3.8% decline in the benchmark index during the same period. In 2026 so far, TCS, Infosys, HCL Tech, Tech Mahindra, and Wipro have declined in the range of 17% to 33%, significantly outperforming the Nifty 50's 10% decline. As per The Journal India, the Nifty IT is now down nearly 40% from its peak, highlighting the severity of the current selloff.
Persistent Systems led the losses among major IT stocks, tumbling 4.69% during Thursday's session. As reported by Business Standard, LTIMindtree fell 2.90%, Tech Mahindra slipped 2.81%, and Infosys declined 2.52%. Coforge and HCL Technologies dropped 2.28% and 2.26%, respectively. Mphasis lost 1.84%, while Tata Consultancy Services and Oracle Financial Services Software declined 1.49% and 1.47%, respectively. Wipro bucked the trend and rose 0.18%, providing some relief to the broader sector decline.
The latest decline has been intensified by OpenAI's announcement of the launch of "OpenAI Deployment Company" (ODC), a new enterprise-focused AI business backed by more than $4 billion in initial investment. According to Business Standard, the new venture targets large-scale AI deployment, workflow redesign and enterprise transformation services. OpenAI has agreed to acquire AI consulting firm Tomoro, which will bring around 150 deployment engineers into the venture. The initiative is backed by 19 investment firms, consultancies and system integrators, including Bain & Company, Capgemini and McKinsey & Company. The move raised concerns over disruption in the traditional IT services industry as the Deployment Company will embed Forward Deployed Engineers within client organisations to identify AI opportunities and deploy AI systems at scale.
Market participants viewed the development as a potential long-term threat to high-margin consulting and digital transformation businesses offered by traditional IT services firms. As reported by NDTV Profit, concerns have emerged that AI tools could replace portions of human-intensive work, reducing billing growth for outsourcing firms. Investors fear this could result in lower revenue expansion as companies deliver more services at reduced pricing levels. Clients are also redirecting technology budgets towards AI infrastructure, hardware and automation capabilities instead of conventional software services, adding to concerns around future demand for traditional IT outsourcing work. The sharp market reaction reflects fears that AI-native firms may increasingly move up the value chain into consulting, implementation, and workflow transformation - domains traditionally dominated by Indian IT services companies. According to The Journal India, experts question whether AI can automate coding, deployment, support and business workflows, potentially disrupting the billable-hour outsourcing model India built its IT empire on.
The current selloff reflects broader concerns about a massive structural shift in the Indian IT industry as AI capabilities evolve. As per The Journal India, while some experts believe Indian IT will adapt and evolve to compete with AI-native companies, others view this as the beginning of fundamental changes to the sector. The multi-year lows across the sector indicate that investors are pricing in significant structural changes to the traditional outsourcing business model. The sustained selling pressure has left the IT sector among the weakest-performing segments of the market, with the sector facing concerns over lower spending on traditional software maintenance and legacy services that historically generated significant revenue for Indian IT firms.
