IT Sector Faces Continued Pressure as Nifty IT Index Drops Over 13% in a Year

Mumbai, September 7 (Daily Kiran) : The Indian stock market is witnessing persistent selling pressure on IT shares. Over the past year, the Nifty IT Index has plummeted by more than 13%, making it the second-largest loser among major indices, following the Nifty FMCG. In this period, Tata Consultancy Services (TCS) has seen a decline of around 25%, Infosys by 24%, Wipro by 28%, HCL Tech by approximately 10%, and Mphasis by nearly 15%.Experts attribute this downturn in IT shares to several factors, including the transformative impact of artificial intelligence (AI) on technology, sluggish growth, disappointing earnings, and investor concerns about the sector's future. AI is rapidly changing how businesses utilize technology services. Traditionally, Indian IT companies relied on a model based on employee numbers, earning revenue through project implementation, software maintenance, testing, and infrastructure support.However, AI tools are increasingly capable of performing many of these tasks more efficiently and quickly. As a result, clients are now expecting greater productivity at lower costs. Despite the rise of AI, concerns about accuracy and error-free execution have emerged, presenting new opportunities for these companies. During TCS's 31st annual general meeting in June, Chairman N. Chandrasekaran noted that the company is investing in AI agents for internal operations.He emphasized that in the near future, TCS will have as many AI agents as employees and described AI as a significant opportunity. While larger firms struggle, mid-tier IT companies have shown better performance. In the last year, Oracle Financial Services Software has delivered a 42% return, Coforge 16%, and Persistent Systems 10%.