India’s IT shares fell to a
three-year low on Tuesday as investor jitters around the threat
posed by artificial intelligence to flagship IT firms flared up
again, after OpenAI announced a new AI venture.
The Nifty IT index fell 3.6% to its lowest since
May 2023, with Tata Consultancy Services, Infosys
, HCL Technologies and Wipro
falling between 2.5% and 4%.
Analysts at HSBC said in a Tuesday note that India’s
top-tier IT firms largely failed to meet street expectations for
earnings in March quarter as well as in their outlooks for the
new financial year, adding that strong spending globally on AI
could be “crowding out” demand for traditional IT services.
HSBC’s warning comes a day after OpenAI said it is launching
a new company backed by more than $4 billion, embedding
engineers into organizations to identify where AI can make the
most impact. It’s the latest challenge to Indian IT firms’
business model from a major AI company targeting enterprise
clients.
Indian IT stocks are unlikely to attract positive investor
interest unless global AI activity, cloud capex growth and cloud
revenue momentum slow, HSBC said.
Indian IT companies derive a significant share of their
revenue from North America and are considered sensitive to U.S.
economic uncertainty and corporate technology spending trends.
The industry has been under pressure for much of 2026,
starting with a February rout after the roll-out of Anthropic’s
Claude Code and on fears rapid advances in generative AI would
disrupt demand for traditional IT and professional services.
India’s IT stocks have slid 25.4% so far this year, making
them India’s worst-performing sector, compared with a 9.7% drop
in the benchmark Nifty 50.
March quarter results have done little to soothe investor
worries. Dollar revenue at industry bellwether Tata Consultancy
Services shrank 0.5% year-on-year to $30 billion for
the year ended March – the first decline since the company’s
2004 IPO.
Industry peers have flagged challenges of meeting targets
with limited visibility on demand: HCL Tech’s CEO C Vijayakumar
said in the company’s post-earnings investor call it took
“25%-30% more effort to convert and get to the same number” in
terms of total contract value.
The broader Indian market remained under pressure on
Tuesday, with the rupee sliding to a record low on elevated
crude oil prices with talks to end the U.S.-Israeli war with
Iran finding no success.