IT Stocks Head For Eighth Week Of Losses As ₹7.7 Lakh Crore Wealth Erodes

India’s technology stocks are on track to log an eighth straight week of losses. In the process, they are set to wipe out nearly ₹7.7 lakh crore in investor wealth and push the sector into one of its deepest corrections outside major market crashes.

The Nifty IT index is set to close in the red for the eighth consecutive week on Friday. The prolonged slide has dragged the combined market capitalisation of all 10 Nifty IT companies below ₹25 lakh crore.

Fall As A Result Of Heavy Foreign Investor Selling

The fall comes amid heavy foreign investor selling. This is due to growing concerns around artificial intelligence reshaping the traditional IT services model, and multiple brokerages cutting earnings expectations and price targets.

The scale of the correction has triggered a sharp divide on Dalal Street. Some analysts warn that AI could structurally disrupt the outsourcing industry. On the other hand, others see the sell-off as an opportunity to accumulate large IT names at lower valuations.

Foreign Investors Exit As Selling Intensifies

Foreign institutional investors (FIIs) were aggressive sellers of IT stocks through February. According to NSDL data, overseas investors sold shares worth about ₹17,000 crore during the month. The selling came in two waves:

• ₹11,000 crore worth of IT shares sold in the first half of February

• ₹5,993 crore sold between 15 February 15 and 28 February

The sustained selling pressure coincided with a sharp fall in the sector during the month. The heavy outflows added to existing concerns around slowing demand in the United States. Note that the US is the biggest market for Indian IT services companies.

Brokerages Flag Structural Risks From AI

Several brokerages have turned cautious on the sector. They have cited the growing role of artificial intelligence in enterprise technology spending. Jefferies said AI could reshape the traditional outsourcing model by shifting work away from managed services toward consulting and implementation.

Other brokerages have also started adjusting earnings expectations. Emkay Global lowered earnings estimates for the sector by:

• 1% for FY27

• 2% for FY28

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What Does It Mean For Investors?

The sharp fall has pushed IT stock valuations to levels not seen in several years. However, the sector now sits at the centre of a debate over how artificial intelligence will reshape global technology spending.

For investors, the divergence in views is stark. Foreign investors have been cutting exposure, while some domestic funds and brokerages have begun accumulating shares after the correction. The sector’s direction will likely depend on two factors.

It will depend on how quickly global clients adopt AI-led technology spending and if Indian IT companies can adapt their business models to that shift. Until there is clearer visibility on both, volatility in IT stocks could remain high.

Sources

The Economic Times

The Week