Nifty IT Tumbles 2%: Infosys, LTM, Mphasis, Tech Mahindra Fall Up To 3% — Why?

IT Stocks Today: IT stocks came under pressure on Monday, with major technology counters falling up to 3% in intraday trade as investors booked profits after the sector's recent rally, while concerns around AI-led disruption, US interest rates and uneven discretionary spending weighed on sentiment.

The Nifty IT index dropped as much as 1.97% to an intraday low of 30,088.05. At 9:40 am, the index was trading 1.87% lower at 30,122.25, while the benchmark Nifty50 was down 0.26% at 23,837.

Among individual stocks, Infosys fell 2.61% to an intraday low of Rs 1,100.50, while LTM declined 2.25% to Rs 4,451.10. Mphasis dropped 2.18% to Rs 2,369.10, OFSS slipped 2.04% to Rs 11,812 and Tech Mahindra fell 1.92% to Rs 1,566.20.

Coforge declined 1.80% to Rs 1,937.10, while HCLTech, Persistent Systems and TCS also traded lower by around 2-3%.

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Why Are IT Stocks Falling Today?

Independent market analyst Ambareesh Baliga said the decline could largely be attributed to profit booking following the sector's recent rally.

“In the past 1-2 months, we have seen some sort of rally. What we are seeing now is normal profit booking after a massive rally.”

However, Baliga also highlighted a bigger structural concern for Indian IT companies — the potential disruption from artificial intelligence.

“AI will disrupt Indian IT companies. A lot of the work that Indian IT companies do today could be replaced by AI, and that could disrupt the industry's revenue growth.”

AI Disruption Adds To IT Sector Concerns

The growing use of AI is creating both opportunities and risks for India's technology services industry. While higher AI adoption could generate new technology spending, it could also automate portions of the work traditionally handled by IT services companies.

This creates uncertainty around the sustainability of revenue growth, particularly if clients increasingly use AI to improve productivity or reduce technology-services costs.

IT Stocks Outlook: Fundamentals Under Pressure

Harshal Dasani, Business Head, INVAsset PMS, said the weakness in IT stocks appears to be more fundamental than simply a one-day risk-off move.

“Firmer US rate expectations are keeping pressure on long-duration technology valuations, while discretionary spending remains uneven and the gap between AI investment and meaningful monetisation is still wide,” Dasani said.

He added that recent rupee strength is also reducing part of the currency cushion typically enjoyed by Indian IT exporters.

Why Analysts Remain Cautious On IT Stocks

Dasani said his stance on the IT sector remains cautious, with a sustained re-rating requiring several fundamental factors to improve simultaneously.

“A durable re-rating needs deal wins to convert into revenue growth, pricing to stabilise and earnings visibility to improve together,” he said.

Until those factors align, rallies in IT stocks could remain tactical rather than signal a sustained change in trend, according to Dasani.

Softer global yields could offer some near-term relief to technology valuations, but earnings growth will ultimately need to provide the foundation for a sustained recovery.

What To Watch For Infosys, TCS, LTM, Tech Mahindra

For investors, the focus now shifts to whether the recent correction remains limited to profit booking or develops into a broader reassessment of IT sector earnings.

Deal wins translating into revenue, discretionary technology spending, US interest rates, rupee movement, pricing and the pace of AI adoption are likely to remain key variables for Indian IT stocks in the months ahead.

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