Indian IT stocks came under sharp selling pressure on Wednesday, sharply diverging from the broader market, as fresh fears over artificial intelligence disruption triggered a global selloff in software shares. The Nifty IT index plunged nearly 6 percent in early trade, marking its steepest intraday fall since April 2025, even as the benchmark Nifty 50 stayed marginally in positive territory.
The selloff was sparked by weakness on Wall Street, where technology stocks fell overnight after AI startup Anthropic unveiled a new productivity platform aimed at in-house legal teams. Investors fear that rapid advances in AI-led automation could accelerate pricing pressure, disrupt traditional software services, and dent long-term profitability across the IT industry.
The Nifty IT index fell as much as 5.9 percent, with losses led by mid- and large-cap names. Persistent Systems and LTIMindtree dropped more than 7 percent each, while Infosys slid over 6 percent. Tata Consultancy Services and Wipro were also under heavy pressure, declining around 6 percent and nearly 7 percent, respectively. Coforge and TCS were down about 5 percent each during early trade.
In late morning, most frontline IT stocks remained deeply in the red, reflecting sustained selling interest rather than a brief knee-jerk reaction. In contrast, the Nifty50 was up around 0.2 percent, extending gains from the previous session, when markets had rallied sharply on optimism over the India–US trade deal.
The IT sector had gained about 1.4 percent on Tuesday following the trade deal announcement, but that optimism faded quickly as global technology stocks came under pressure. In the US, the Nasdaq ended 1.43 percent lower overnight. A widely tracked basket of US software stocks fell about 6 percent, recording its sharpest single-day decline since April’s tariff-related selloff. Asian technology peers mirrored the weakness, particularly in legal software and data services segments.
Despite the sharp correction, some positives remain for Indian IT companies. Improved India–US trade relations are seen as sentimentally supportive for the sector, given that over 60 percent of IT revenues are linked to the US market. While IT services are not directly affected by tariffs, easing geopolitical tensions and better policy optics could support discretionary technology spending and global capability centre expansion over time.
Separately, sentiment around technology stocks has also drawn support from the Union Budget 2026, which proposed tax incentives for foreign cloud service providers operating data centres in India, signalling continued policy backing for the digital infrastructure ecosystem.