Indian IT stocks remained under intense pressure on Thursday, extending their losses for a fourth consecutive session as investors grew increasingly concerned about the pace at which artificial intelligence could disrupt the traditional global outsourcing model. According to The Economic Times, the NIFTY IT declined over 2%, sharply underperforming the benchmark NIFTY 50, which gained around 0.8% during the session. By 1:44 PM IST, the NIFTY IT index was trading at 27,379.15, down 537.50 points or 1.93%. The index opened at 27,847.50, touched an intraday high of 27,856.00 and slipped to a low of 27,078.00. With the latest decline, the NIFTY IT index has now fallen more than 40% from the record high it touched in December 2024, highlighting the magnitude of the sector's prolonged correction. As per The Business Crunch, the sector is now trading at multi-year lows as the biggest threat may not be another IT company but AI itself.
Selling was broad-based across most frontline technology stocks, with several companies either touching or hovering near their 52-week lows. However, Wipro was the only major stock to remain in positive territory, rising 0.16% and emerging as the only major stock in the segment to remain marginally positive. As reported by The Economic Times, Mphasis declined 0.68% to ₹2,130.70, while Oracle Financial Services Software slipped 1.04% to ₹8,836.00. The market reaction was particularly severe for India's service-based IT giants, as investors fear these companies may be sidelined by AI companies that can now automate and deploy their own technology more efficiently. According to The Business Crunch, the sustained pressure reflects concerns that AI-native companies could directly compete with Indian IT giants in consulting, software implementation and workflow transformation.
Among the worst performers, Persistent Systems emerged as the top loser, declining 4% and making it the worst performer among the major constituents. Coforge fell nearly 2%, while HCL Technologies dropped over 2% and Tech Mahindra lost 2%. According to The Economic Times, Infosys fell 2.6% and TCS lost 1% during the day. Coforge declined 2.01% to ₹1,271.00, while Tech Mahindra dropped 2.37% to ₹1,342.40. The sustained underperformance reflects growing unease around the near-term earnings outlook for the Indian IT sector, particularly after several large companies issued cautious commentary and softer growth guidance for FY27. As per The Business Crunch, the sector faces the question of what happens to the billable-hour outsourcing model India built its IT empire on if AI can automate coding, deployment, support and business workflows.
The immediate trigger for Thursday's sharp decline was the announcement by OpenAI of a new enterprise-focused initiative called 'The Deployment Company.' As reported by Goodreturns, the new business unit is designed to provide direct, hands-on artificial intelligence implementation services for enterprise customers. Through its acquisition of consulting firm Tomoro AI and the use of specialised 'Forward Deployed Engineers,' OpenAI is expanding beyond the development of AI models into workflow redesign, systems integration and organisational transformation. This move has heightened concerns that AI companies are increasingly entering the high-value consulting and implementation space, potentially competing directly with traditional IT services firms that have historically earned substantial revenues from enterprise transformation projects. According to The Business Crunch, this represents a massive structural shift in the industry as AI-native companies could directly compete with Indian IT giants in consulting, software implementation and workflow transformation.
According to Kotak Equities, cited in The Economic Times, IT firms are making reasonable headway in AI-driven opportunities, although it will not be enough to compensate for deflationary headwinds. The sustained underperformance reflects growing unease around the near-term earnings outlook for the Indian IT sector, particularly after several large companies issued cautious commentary and softer growth guidance for FY27. Investors have become increasingly concerned that demand visibility in key overseas markets, especially the United States, remains weak as global companies continue to delay discretionary technology spending. Fourth-quarter results were mildly disappointing after relative stability in the preceding few quarters, with revenue growth missing estimates marginally for most companies. The combination of minor misses in growth estimates, unexciting TCV, guidance below expectations and the reality of GenAI-led revenue deflation will keep pressure on multiples intact. As OpenAI scales its ability to build 'AI-native' infrastructure directly for clients, the legacy IT sector faces a 'collision' of technological disruption and macroeconomic instability, leading to today's significant dip. Some experts believe Indian IT will adapt and evolve, while others think this marks the beginning of a massive structural shift in the industry.
