IT stocks crash! Infosys, TCS, Wipro, HCL Tech - Nifty IT tanks over 2% today, biggest sectoral loser - What lies ahead?
IT stocks today: Indian IT stocks came under intense selling pressure on Tuesday, October 27, as investors reassessed the sector's growth prospects amid rising concerns over artificial intelligence (AI), global economic uncertainty and elevated valuations. Moreover, weakness on Dalal Street added to the weakness.
The sell-off pushed the Nifty IT index down 2.3%, making it the worst-performing sectoral index of the day, compared with a 0.4% decline in the Nifty 50.
Heavyweights including Infosys, TCS, Wipro and HCL Technologies dragged the sector lower, raising questions about whether the latest correction is a temporary bout of profit-taking or a warning that the traditional IT services model faces a more challenging growth environment.
Selling was broad-based across the IT sector, with several large-cap and mid-cap companies losing ground during intraday trade. TCS and Infosys fell as much as 3%, while Persistent Systems and Wipro declined more than 2% each. HCL Technologies, Mphasis, Tech Mahindra and Coforge shed more than 1% apiece. L&T Technology Services was the notable exception, trading around 1% higher.
The sharp decline came despite a strong recent performance in the sector. The Nifty IT index had gained 12% over the past month, 8% over three months and 9% over six months. However, the index remained down 12% over the past year, suggesting that the recent rebound has not yet erased the damage from its longer-term decline.
One of the biggest concerns weighing on IT stocks is the possibility that AI-driven automation could disrupt traditional outsourcing contracts. Investor anxiety has intensified around the rapid expansion of AI platforms, including reports highlighting Anthropic's potential $1.5 trillion valuation.
For Indian IT services companies, the challenge is more complicated than simply adopting new technology. Their traditional business models have relied heavily on deploying skilled employees for software development, maintenance, testing and other technology services, often charging clients based on the time and resources involved. If AI tools allow customers to automate more tasks with fewer employees, demand for conventional services could weaken.
Moreover, global macroeconomic conditions are adding to the strain. Brent crude has climbed towards $115 per barrel amid escalating Middle East tensions, while persistent foreign portfolio investor outflows have weighed on domestic market sentiment. Higher oil prices are particularly challenging for India because they can increase inflationary pressures, widen the import bill and complicate the outlook for interest rates and the rupee.
The Indian currency also weakened for a third consecutive session, falling 25 paise to close at 95.19 against the US dollar, according to the figures provided. The dollar index traded above 101.80, while the US 10-year Treasury yield remained below 5% for a third consecutive session. These developments leave investors balancing the potential benefit of a weaker rupee for exporters against the broader risks posed by global uncertainty and foreign fund outflows.
The next direction for IT stocks will depend on whether companies can justify their valuations through earnings growth and credible strategies for monetising AI. The US Federal Reserve's October 27–28 meeting is a key global event, with markets expecting interest rates to remain unchanged. Consequently, investors are likely to focus more on the Fed's guidance on inflation and future policy than on the immediate decision.
A more hawkish message could push US yields and the dollar higher, potentially worsening pressure on emerging-market equities. A more balanced tone could support a recovery, although it would not resolve the sector's structural concerns about AI disruption.
Indian IT stocks could be gearing up for a recovery in the second half of FY27, with brokerages betting on large-deal ramp-ups, resilient earnings and the potential for a valuation re-rating despite persistent macroeconomic and AI-related concerns.
Jigar S Patel, Senior Manager - Technical Research, Anand Rathi Share and Stock Brokers Limited suggests invetsors to buy on dips.
“A major technical development has emerged in the Nifty IT index, with the recent rally pushing the daily RSI above the crucial 70 mark for the first time since January 2026. From January to September 2026, the RSI largely remained within a bearish range of 60–20, indicating sustained weakness in momentum. However, the recent move suggests a potential range shift from the bearish 60–20 zone to the bullish 80–40 zone, signalling improving momentum and a possible change in trend.
Additionally, the index has surpassed its previous swing high recorded in August 2026, with the RSI moving above 70, further strengthening the bullish outlook. From a technical perspective, 30,000 is the major support, while 33,000 is the immediate resistance. Given the sharp rally, fresh buying should be avoided at elevated levels. We recommend waiting for a healthy pullback towards support zones before considering fresh long positions,” advised the brokerage.
Meanwhile, Jefferies sees scope for an IT sector valuation re-rating as earnings resilience challenges pessimistic long-term growth assumptions. In its October 21 note, the brokerage said the sector's correction had already factored in lower growth expectations.
“With IT firms still delivering growth despite weak macro and AI deflation, investors are more willing to revisit their terminal growth assumptions,” Jefferies said.
However, a sustained recovery will depend on companies meeting FY27 and FY28 growth expectations. Weakening sentiment around global AI capital expenditure or further earnings disappointments could derail the anticipated re-rating.
Pranati Deva is a seasoned financial journalist with over a decade of experience in high-pressure newsroom environments, currently working as a Senior Sub Editor at LiveMint. Over the years, she has developed a reputation for sharp editorial judgement, a strong grasp of market dynamics, and the ability to translate complex financial developments into clear, engaging stories for a wide audience. <br><br> Her core areas of coverage include stock markets, leading listed companies, currencies, and commodities, with a particular strength in fast-paced, real-time market reporting. She is known for handling breaking market news, earnings-driven stock movements, and macroeconomic developments with speed, accuracy, and context—qualities that are essential in financial journalism. <br><br> Pranati has built a diverse and credible professional track record across some of India’s most respected news organisations, including MintGenie, CNBC-TV18, Business Standard and EconomicTimes.com. During her stints at these platforms, she produced data-driven market stories, curated and steered live blogs during volatile trading sessions, and conducted interviews with market veterans, fund managers, economists, and industry experts. Her work often combines on-ground reporting with analytical depth, helping readers make sense of daily market fluctuations and longer-term trends. An alumnus of the Symbiosis Institute of Media and Communications and Hansraj College, University of Delhi, Pranati brings a strong academic foundation to her journalism. She specialises in real-time financial reporting, with a keen focus on precision, balance, and insight, aiming to decode market movements in a way that is both informative and accessible to readers across experience levels.
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