Nifty IT index cracked nearly 3% on Monday to hit a fresh 52-week low, dragging Infosys, TCS, Wipro and HCL Technologies down up to 3% each. The sectoral index has now shed roughly 13% in three weeks, marking its worst stretch in 2026 as global AI trade reversal collides with renewed US rate-hike fears, per Moneycontrol and SEBI market data. Jefferies downgraded six Indian IT stocks last week, citing persistent AI disruption risks and muted near-term demand visibility.
What Happened
Nifty IT index tumbled 2.7% to close at 27,795 — its lowest level since June 2025 — as every major constituent ended in the red. Infosys declined 2.8%, TCS shed 2.3%, Wipro dropped 2.1% and HCL Technologies fell 1.9%. The index has now corrected nearly 13% in three weeks, wiping out over ₹2.5 lakh crore in market cap. Wipro emerged as the biggest laggard among frontline names, down 3.2% intraday before paring losses. F&O data showed a sharp surge in bearish positions, with put-call ratios spiking across IT counters.
Why It Matters
The selloff is driven by a dual catalyst. First, AI disruption fears intensified after Anthropic's Claude Code and similar tools demonstrated autonomous coding capabilities that threaten traditional IT services models. Accenture's weak FY26 guidance last week reinforced concerns about discretionary tech spending. Second, hawkish Fed commentary has pushed back rate-cut expectations, pressuring high-multiple growth stocks globally. Nifty IT's forward P/E has compressed from 28x to ~22x, but Jefferies warns of 65% downside in a worst-case AI disruption scenario. The sector's weight in Nifty 50 has shrunk to a 20-year low.
What's Next
Near-term direction hinges on two triggers: Q1FY27 earnings starting next month (TCS July 10, Infosys July 17) and Jackson Hole symposium in August for Fed pivot signals. Analysts are split — base case sees Nifty IT recovering to 29,000-30,500 by year-end on gradual demand normalization; bear case sees further 20-30% downside if AI monetization accelerates. Fund managers remain overweight but cautious, preferring Tech Mahindra and Persistent Systems for AI-adjacent exposure. Key support at 27,500; break opens path to 26,800.