IT stocks have witnessed a dramatic fall from their February 3, 2026 peak amid fears that artificial intelligence (AI)-led growth will disrupt the traditional outsourcing model. In the last four months, HCL Technologies emerged as the top loser among Nifty IT index constituents, declining 36% from its high of ₹1,780 in February to an intra-day low of ₹1,132 on Monday. LTI Mindtree and TCS also slumped around 36% each, while Infosys, Wipro and Persistent Systems crashed in the 25-32% range on the NSE. The NSE Nifty IT index has wiped out almost one-third of its value, falling from its February 3 peak of 40,301 to a low of 28,418 in Monday's trade. In comparison, the Nifty 50 has declined 12.4% in the same period, highlighting the sector-specific nature of the selloff. Hitesh Rathi, technical analyst at Angel One, notes that IT stocks continue to trade with a negative bias on the charts and are prone to further fall if they dip below crucial support zones.
The IT sector decline was part of a broader market-wide selloff that saw the BSE Sensex decline 0.97% to close at 73,524.26, while the NSE Nifty 50 fell 1.04% to end at 23,123. The benchmark indices extended losses for a second consecutive session, reflecting weak investor sentiment and heavy selling pressure across large-cap, mid-cap and small-cap stocks. Broader markets underperformed significantly, with the Nifty Midcap 150 index ending over 1.5% lower and the Nifty Smallcap 250 index dropping more than 2%. Among individual stocks, Wipro emerged as the biggest loser of the day, tumbling 8.45%, with the sharp decline weighing heavily on the benchmark index and dragging the broader technology pack lower. Jio Financial Services was another major laggard, ending 3.39% lower, while food delivery player Eternal slipped 3.2%.
Radical transformation in technology led by AI is shifting the dynamics of discretionary spending and mounting pressure on traditional IT services. Global technology spending toward AI increased by 10-13%, while Indian IT services growth slowed to around 3-4%, according to Kotak Securities in its report. Infosys management in its FY26 annual report said they expect client spending and investments to continue to move towards AI in the near term, with these investments expected to be crucial during this period of economic uncertainty. The management noted they continued to witness businesses attempting to reimagine their cost structures, increase business resilience and agility, personalize experiences for customers and employees, and launch new and disruptive products and services, aided by enterprise AI. ICICI Securities noted that Q4FY26 reinforced the divergence between Tier-1 and select Tier-2 players, with execution-led growth stories continuing to outperform despite an uncertain macro backdrop. Market participants also pointed to concerns around stretched valuations in AI-linked stocks, with analysts noting that any cooling in the AI trade could impact sentiment for Indian IT companies, which have been key beneficiaries of the global AI spending theme.
Technical analysts at Angel One reckon that IT stocks such as HCL Technologies, Infosys and TCS continue to look fairly weak on charts and may extend losses if they dip below crucial support zones. Infosys recently broke below the crucial ₹1,250–₹1,235 support zone, though the breakdown was not accompanied by any meaningful downside follow-through, highlighting a notable lack of bearish momentum. The significance of this zone is further reinforced by the fact that it coincides with the 50% Fibonacci retracement of the stock's rally from the 2020 lows. TCS has been one of the weaker performers, remaining firmly entrenched in a primary downtrend with a consistent lower-high, lower-low structure. The stock is currently approaching a crucial support zone in the ₹2,180–₹2,150 band, which coincides with the 78.6% Fibonacci retracement of its rally from the 2020 lows. HCL Technologies has broken below the neckline of a bearish Head and Shoulders pattern and trades below all major exponential moving averages, though it earlier formed a Bullish Low Pole highlighting strong demand in the ₹1,130–₹1,100 support zone.
