IT rout on Nifty50: TCS, Infosys, Wipro, HCL Tech fall up to 32% in 2 years; Tech Mahindra bucks trend

IT shares see profit booking in trade. 

• Tech Mahindra is the only Nifty50 IT stock with positive returns over two years.
• AI disruption and weak global spending weigh on Indian IT sector sentiment.
• ICICI Bank overtook TCS as India's fifth largest company by market cap.

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All information technology (IT) shares listed on the benchmark Nifty50 have remained under selling pressure over the past two years, delivering negative returns to investors, according to data from BSE Analytics.

Tata Consultancy Services (TCS) has declined more than 32 percent during the period. Infosys has fallen 17 percent, Wipro is down 13 percent and HCL Technologies has slipped 10 percent.

Tech Mahindra is the only exception among the Nifty50 IT constituents, gaining 19 percent over the same two-year period.

Market experts advise caution amid ongoing IT sector weakness

Ajit Mishra, Senior Vice-President (Research) at Religare Broking, said concerns over lower discretionary spending in key global markets had earlier weighed on sentiment.

"Now, the narrative that AI is going to disrupt the business model for our IT companies is causing the damage. It is undoubtedly a big challenge to tackle but we feel it is too early to outright reject their comeback. Participants should keep their exposure low and wait for clarity in the coming quarters," he said.

Ruchit Jain, Vice President at Motilal Oswal Financial Services, said the Nifty IT index breached its 200-day exponential moving average support of 36,000 on February 4, indicating a change in trend.

"Since then, the index has continuously been under pressure and the stocks have witnessed volume-based selling. Hence, it is advisable to avoid any bottom fishing until there are signs of a trend reversal," he said.

In Thursday's trading session, the shares of Indian IT firms fell sharply in line with losses in their Wall Street peers after better-than-expected US jobs data for January reduced expectations of an early rate cut by the US Federal Reserve.

After falling 12.6 percent in 2025, the index has declined about 11 percent so far in 2026 amid concerns that AI-driven changes could impact earnings of software services companies.

"It’s a mix of knee-jerk reaction and concerns over real threat to IT," Vinit Bolinjkar, Head of Research at Ventura Securities, told Reuters. "AI automation targets labour-heavy models at top Indian IT firms, slashing billable hours and headcount," he added.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said tech stocks are unlikely to recover soon following sharp declines in the American Depositary Receipts (ADRs) of leading Indian IT companies in the US.

"The latest US jobs data indicating addition of 1,30,000 jobs last month and unemployment falling to 4.3 per cent points to the possibility of no rate cuts by the Fed in the near term. In India, too, it appears that the rate-cutting cycle is over since growth is good and inflation is expected to inch back to the RBI’s long-term target by the end of FY27," he said.

Meanwhile, ICICI Bank overtook TCS to become the fifth largest Indian company by market capitalisation on February 12. This came a day after State Bank of India surpassed the IT major to take the fourth position, as TCS shares declined amid the broader AI-led tech selloff.

Shares of ICICI Bank rose nearly 2 percent on February 12, taking its market capitalisation to around Rs 10.2 lakh crore. TCS shares fell about 5 percent, with its market capitalisation slipping to Rs 9.99 lakh crore.

This is the first time TCS market capitalisation has fallen below the Rs 10 lakh crore mark since December 2020.

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