IT stocks extend slide; Nifty IT down nearly 5% in six sessions

IT stocks remained under pressure on Tuesday, with the Nifty IT index falling 0.97% to 28,761, extending its losing streak to six consecutive sessions with a cumulative decline of 4.65%.

Among key laggards, Coforge dropped 3.62%, Wipro fell 2.15%, Persistent Systems declined 2.11%, Oracle Financial Services Software slipped 1.68%, Infosys lost 1.59%, Tata Consultancy Services fell 1.21%, Mphasis declined 0.94%, HCL Technologies was down 0.93%, LTIMindtree slipped 0.78%, and Tech Mahindra edged lower by 0.40%.

The broader weakness comes amid a sharp correction in the sector, with the Nifty IT index down around 29% from its 52-week high of 40,301.40. The sell-off has been largely driven by concerns that generative AI could disrupt traditional revenue streams such as application development, testing, and maintenance, which account for a significant share of industry revenues. Industry estimates suggest AI could impact 25-30% of such work and potentially dent overall revenues by 10-12% over the next few years, while also leading to slower hiring and efficiency-driven workforce changes.

Despite the decline, the correction is nearing historical averages, and valuations have turned more reasonable. Going ahead, companies with strong AI capabilities, digital exposure, and robust deal pipelines are expected to be better positioned, keeping the broader outlook cautiously constructive even as the sector undergoes a structural transition.

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