Nifty IT index hits 3-year low amid AI disruption fears
Persistent, TCS and Infosys fall as OpenAI sparks selloff
US rate worries and weak tech spending pressure Indian IT stocks
Indian IT stocks came under intense selling pressure on Tuesday, dragging the Nifty IT index down 3.7% to its lowest level since May 2023, amid fresh concerns around artificial intelligence disruption, slowing demand for traditional IT services and uncertainty over US interest rates.
The sectoral index extended losses for the second straight session and has now declined nearly 4.5% over the past two trading sessions. All 10 constituents of the index traded in the red.
1 May 2026
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Persistent Systems emerged as the biggest laggard, falling nearly 5%, while shares of Indian IT majors, including Infosys and TCS, fell up to 5% to hit fresh 52-week lows.
Shares of Infosys, Tech Mahindra, HCL Technologies, Wipro and Coforge also fell between 2% and 4%.
OpenAI Move Triggers AI Disruption Fears
The sharp decline followed an announcement by OpenAI that it is launching a new company backed by more than $4 billion to help organisations build and deploy AI systems.
The company said the initiative will deploy specialised "forward deployed engineers" directly within organisations to redesign workflows, integrate AI systems and solve complex operational challenges.
The move intensified fears that generative AI and automation could increasingly disrupt traditional IT outsourcing and consulting models, especially in areas such as software development, support services and enterprise operations.
Analysts said investors are becoming more cautious about the long-term impact of AI-led efficiency gains on India's export-driven IT services industry.
The sector had witnessed similar pressure earlier this year after Anthropic launched AI tools that raised concerns around disruption in data and professional services businesses globally.
US Rate Concerns Add to Pressure
Apart from AI-related worries, sentiment was further hit by a weak earnings outlook from HSBC and growing concerns around the trajectory of US interest rates.
India's nearly $315 billion IT sector derives close to 57% of its revenues from the US market, making it highly sensitive to shifts in American economic growth and corporate technology spending trends.
Investors remained cautious ahead of key US inflation data due later in the day, which could influence the US Federal Reserve’s monetary policy decisions.
Higher interest rates in the US typically increase recession risks and often lead global clients to cut discretionary technology spending, delay large digital transformation projects and reduce outsourcing budgets.
"We've already seen expectations for a lot of central banks shift in a much more hawkish direction, and for the Federal Reserve, it's meant a dropping of all rate cut possibilities for this year," Ilya Spivak, Head of Global Macro at Tastylive, told Reuters.
Oil Prices, Global Risks Hurt Sentiment
The broader global risk-off mood also weighed heavily on IT stocks as concerns resurfaced around the fragile US-Iran ceasefire and rising crude oil prices.
Oil prices rose nearly 1%, adding to fears that inflation could remain elevated globally and force central banks to maintain tighter monetary policy for longer.
Analysts said the ongoing geopolitical uncertainty, combined with fears of slower global economic growth, is overshadowing the traditional benefit Indian IT firms receive from a weaker rupee.
While rupee depreciation generally boosts export earnings for software companies, investors are currently more focused on concerns over slower client spending, weaker deal pipelines and delayed discretionary technology investments.
The Nifty IT index has now fallen more than 8% over the past month, reflecting persistent pressure on the sector amid volatile global conditions and rising concerns over AI-led disruption.
