IT stocks traded lower on Monday, following a sharp sell-off in the Indian stock market. The Nifty IT index declined more than 2%, with most of its constituents slipping in the red.
HCL Technologies, Tata Consultancy Services (TCS), Persistent Systems, Infosys and Wipro were the top losers in the Nifty IT index, falling over 1% each. On the contrary, Coforge and Mphasis were the only gainers in the index.
The fall in IT stocks came as the Indian stock market crashed amid weak global market cues. The frontline indices, Sensex and Nifty 50 dropped over 1.5% each.
The fall in the Indian stock market today came amid renewed escalating geopolitical tensions as earlier optimism surrounding the temporary ceasefire in the Middle East faded after US–Iran talks collapsed over the weekend, raising fears of a prolonged conflict and potential supply disruptions.
A sharp rise in crude oil prices above the $104 per barrel mark has been the key driver behind the risk-off sentiment, triggering broad-based selling across the market.
Indian IT stocks have come under sustained selling pressure recently following the launch of advanced models by GenAI platforms such as Claude and Palantir. This has heightened concerns over potential disruption to traditional SaaS and IT services business models. As a result, the Nifty IT index has declined by 19% so far in 2026.
IT stocks have come under renewed pressure, with fresh concerns around earnings compounding already elevated fears of AI-led disruption.
The Nifty IT index declined nearly 20% in February amid a global sell-off in technology stocks, triggered by concerns that AI start-ups — particularly following developments from Anthropic — could disrupt traditional IT services.
Impact of Anthropic’s Mythos
Anthropic’s Mythos model exhibits a step-jump in benchmark performance across software engineering tasks, a deviation from the trajectory of incremental/moderate improvements in the recent past. Mythos provides a large improvement in agentic software development, based on qualitative assessments.
Kotak Institutional Equities believes that the model raises near- to medium-term disruption risks for IT services with the caveat that model capabilities are largely unproven in real-world scenarios due to a lack of a public release. Risks can be higher for firms with more exposure to application services.
“The Mythos model provides a firmer foundation for AI disruption-related concerns and could pressurize the valuation multiples of IT services companies. We expect Mythos to increase efficiencies across all IT services segments. Yet, stronger agentic software engineering capabilities could result in widening the gap in productivity increase between application services (also called custom application development) and other IT services segments (including BPO),” said Kotak Equities.
According to the brokerage firm, among Tier 1 Indian IT, Infosys has a higher exposure to apps, while HCL Technologies has a lower exposure. In general, mid-tier IT has a higher exposure to apps, with Persistent Systems leading the pack among the Indian names. Mid-tier challengers can offset headwinds by share gains from slower to adapt incumbents.
The latest leg of the sell-off in Indian IT stocks is also being driven by emerging signs of a slowdown. TCS Q4 results showed a decline in dollar revenue despite a stronger dollar, indicating weaker client spending. This has reinforced concerns that AI-led disruption may already be weighing on growth prospects for legacy IT firms.
Investors will now focus on the IT sector earnings, with TCS Q4 results already out last week, signalling weak sentiment.
IT Sector Q4 Results
Analysts expect the operating performance of IT services companies to remain subdued in the quarter ended March, as the fourth quarter is typically seasonally weak due to a lower number of working days.
There has been a modest improvement in discretionary technology spending within the BFSI and Technology verticals. However, segments such as Manufacturing, Automotive, and Communications continue to exhibit weakness.
Additionally, concerns persist over the potential adverse impact of automation tools developed by Anthropic on the business models of Indian IT firms. Clients remain cautious regarding AI adoption, resulting in elongated decision-making cycles.
According to HDFC Securities, the Indian IT services sector braces for another muted quarter in Q4FY26E, with tier-1 players projected to see a growth of -1.1 to +0.9% QoQ CC and mid-tier companies ranging growth from -1.8% to +3.4%, as macro uncertainty, ongoing geopolitical tensions, and cautious client decision-making on large deals amid war escalation risks temper nearterm revenue traction.
The rupee depreciation brings some respite to margins, but AI-led deflation concerns triggered the recent multiple de-rating.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
