Midcap IT stocks plummet up to 8% as sell-off deepens beyond large caps; Persistent, Coforge lead losses

IT stocks fall today

• Midcap IT stocks fell 4-8 percent, underperforming large caps
• AI disruption fears and downgrades drove the sharp sell-off
• Persistent, Coforge, and L&T Tech saw steepest declines

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Midcap IT stocks came under intense selling pressure around noon on Tuesday, falling 4-8 percent and extending the information technology-sector rout beyond frontline names. The losses in mid-sized companies' shares were sharper than those seen in large-cap IT stocks. Investor anxiety around artificial intelligence-led disruption continued to weigh on sentiment across the sector.

Among the top losers on the BSE Midcap index, Persistent Systems shares plunged 7.7 percent to Rs 4,595, while Coforge fell 6.6 percent to Rs 1,203.6. L&T Technology Services stock declined 5.6 percent to Rs 3,245.4, and Tata Elxsi slipped 5.2 percent to Rs 4,466.

Other midcap IT stocks also saw steep intraday losses. KPIT Technologies dropped 4.9 percent to Rs 773, Tata Technologies slid 4.7 percent to Rs 572.45, and Hexaware Technologies was down 4.5 percent at Rs 480.9. IT-enabled services firm Inventurus Knowledge Solutions also traded sharply lower, shedding 5.3 percent to Rs 1,460.6.

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The sell-off in midcap IT stocks came even as frontline IT stocks were also under pressure, with the Nifty IT index down over 5 percent. However, losses in midcap names were deeper than those in large-cap peers. TCS, Infosys, HCL Technologies and Tech Mahindra stocks were trading lower by around 4-7 percent, highlighting a sharper risk-off move in the midcap space.

The broader sell-off in IT stocks has been driven by concerns that rapid advances in artificial intelligence could structurally alter the traditional IT services business model. Recent claims by Anthropic that its AI tools can significantly reduce the cost and complexity of legacy software modernisation have intensified fears that pricing power and managed services revenues could come under pressure across the industry.

Brokerage commentary has added to the cautious tone. Earlier this week, Jefferies downgraded several IT stocks, warning that AI could shift the sector’s business mix towards consulting and implementation work while shrinking managed services, increasing cyclicality and execution risks. CLSA, while striking a more measured stance and saying fears of AI-led disruption appear overdone, also cut target prices across the sector, citing continued valuation de-rating.

With both large-cap and midcap IT stocks under pressure, investors appeared to be reassessing growth visibility across the technology space, with midcap names bearing the brunt of the sell-off due to higher valuation sensitivity.

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