IT Stocks Fall Today: Infosys, TCS, HCLTech Drop Up to 6% Amid Global and AI Concerns

Shares of major Indian IT companies declined sharply on Tuesday, dragging the sector lower and weighing on the broader market. Stocks of Infosys, Tata Consultancy Services (TCS), and HCLTech dropped by as much as 6% during the trading session, reflecting growing investor concerns about global uncertainty and technological disruption.

The sell-off pushed the BSE IT index down by 424 points to close at 30,627, while the Nifty IT index plunged nearly 4.73%. Most technology counters remained deep in the red, putting pressure on benchmark indices including the Sensex and Nifty.

The sector has faced sustained pressure this month amid rising fears that artificial intelligence could significantly reduce demand for routine outsourcing work handled by Indian IT firms.

Global tariff uncertainty unsettles markets

One major trigger behind the decline is rising global uncertainty ahead of US President Donald Trump’s State of the Union address. Investors are closely watching potential trade policy signals after the European Union recently froze a major agreement with the United States following tariff changes.

Tariffs are taxes imposed on imported goods. When trade policies become unpredictable, businesses often delay spending decisions, leading to volatility in stock markets.

Indian IT companies derive a significant portion of their revenue from the United States and Europe. As a result, any concerns about trade disruptions directly impact investor sentiment toward the sector.

AI disruption fears intensify selling pressure

Another key factor driving the decline is growing anxiety about artificial intelligence reshaping the IT services industry. Recent launches of advanced automation tools by US-based AI firms have raised concerns that routine tasks such as documentation, coding, and data processing could increasingly be handled by AI systems.

These services form a large portion of the work outsourced to Indian IT companies. While business fundamentals remain stable, investors fear that future demand could weaken as automation becomes more sophisticated.

The negative sentiment intensified after American Depository Receipts (ADRs) of Indian IT firms declined overnight in US markets. ADRs often reflect global investor sentiment, and their fall signaled weakness ahead of the domestic market opening.

Foreign investors shift focus away from IT

Market observers also highlight shifting foreign investment patterns. Foreign institutional investors have recently returned to Indian equities but are directing funds toward sectors tied to domestic growth, such as capital goods and financial services.

In contrast, IT stocks continue to see selling pressure because the sector depends heavily on overseas clients, where spending remains cautious.

Global brokerages have also adopted a cautious outlook, trimming price targets for major IT firms amid expectations that clients in banking, retail, and technology sectors may reduce discretionary spending. Such spending typically includes new technology projects, which are often postponed during periods of economic uncertainty.

Market sentiment remains cautious

The combination of global trade concerns, AI-driven disruption fears, weak US market cues, ADR declines, and cautious analyst outlooks has created a challenging environment for IT stocks.

Despite the decline, analysts note that the companies remain fundamentally strong and profitable. The current weakness reflects uncertainty about future demand rather than immediate business deterioration.

For retail investors, the drop signals a shift in global sentiment rather than a structural collapse of the sector. Meanwhile, the broader Indian market continues to show resilience, supported by strong domestic growth trends and renewed foreign investment in local economy-driven sectors.

For now, India’s IT sector finds itself navigating a period of transition shaped by technological change and global economic uncertainty.