Shares of Infosys, the country’s second-largest IT services company, have remained under sustained selling pressure, with the decline deepening further in Wednesday’s trade, July 1. The stock fell another 1.1% to ₹986.90 apiece.
This marks the first time Infosys has slipped below the ₹1,000 mark since September 2020, highlighting the sharp deterioration in investor sentiment toward technology stocks.
Domestic IT shares have been under intense selling pressure since the beginning of the year, with the sector witnessing its worst downturn since 2022—and one of its weakest performances since the 2008 global financial crisis.
Several factors have weighed on the sector, including fears of AI-led disruption, muted earnings growth, weak management guidance, rising expectations of a US Federal Reserve rate hike, and sustained foreign institutional investor (FII) selling. Together, these have made the Nifty IT index the worst-performing sectoral index of 2026.
Infosys m-cap drops over 2.5 lakh crore
Infosys shares have remained in a prolonged downtrend since February, losing nearly 40% of their value and closing each of the last five months in the red. The sharp decline has erased nearly ₹2.53 lakh crore from the company’s market capitalisation in 2026, reducing its valuation to around ₹4 lakh crore at Wednesday’s intraday low.
At its peak, Infosys commanded a market capitalisation of ₹8.37 lakh crore. The steep correction has also resulted in significant mark-to-market losses for domestic mutual funds, one of the company’s largest shareholder groups.
So far in 2026, the stock has declined 40%, extending last year’s 14% fall and taking its cumulative decline over the past 18 months to 47%.
From its record high of ₹2,006, the stock has corrected more than 51%—a rare occurrence for a blue-chip company and one that reflects growing investor concerns over the long-term growth outlook for the IT services industry.
AI disruption, weak guidance weigh on IT stocks
Sentiment toward the IT major has remained weak amid rapid advances in artificial intelligence, particularly following the launch of new generative AI models. Investors continue to worry that AI could disrupt traditional IT services and reduce demand for conventional software development and outsourcing businesses.
The latest leg of the sell-off began in February after the rollout of Anthropic’s Claude Code, which intensified concerns that AI-powered coding tools could reshape the global IT services industry.
Adding to the pressure, India’s leading IT companies largely missed Street expectations in their March-quarter earnings and issued cautious guidance for FY27, prompting foreign investors to reduce exposure to the sector.
Concerns have also mounted over the US macroeconomic outlook. Persistent inflationary pressures, fuelled partly by elevated crude oil prices amid Middle East tensions, have strengthened expectations of a Federal Reserve rate hike later this year.
Higher borrowing costs could curb discretionary technology spending by US enterprises, potentially impacting deal wins for Indian IT companies, which derive a significant portion of their revenue from North America.
The sector came under further pressure after Accenture issued weaker-than-expected guidance, raising fresh concerns over global technology spending and dragging several IT stocks to their 52-week lows.
Overall, Indian IT stocks have declined around 32% so far this year, compared with a 8% fall in the benchmark Nifty 50. The last comparable sell-off was witnessed in 2008, when the Nifty IT index plunged nearly 55% during the global financial crisis.
Q1 earnings, FY27 outlook in focus
Looking ahead, investors will closely watch the June-quarter earnings season for signs of demand recovery and management commentary on the outlook for FY27.
While most brokerages expect Indian IT companies to begin FY27 on a subdued note, any improvement in deal wins, client spending, or AI-led revenue opportunities could help restore investor confidence after one of the sector’s sharpest corrections in recent years.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
