Mumbai: IT stocks saw heavy selling on Tuesday, becoming the biggest drag on the stock market. Investors turned cautious due to rising concerns that generative artificial intelligence (AI) could affect traditional business models of IT companies.
The Nifty IT index dropped as much as 2.59 percent during the day, touching a low of 28,288. All stocks in the index were trading in the red.
Sharp Fall In Key IT Stocks
Several major IT companies reported noticeable declines. Coforge was the worst performer, falling nearly 6.7 percent.
Wipro dropped around 3.5 percent, while Persistent Systems fell about 3 percent. Infosys declined 2.77 percent and TCS slipped nearly 2 percent.
Other companies like HCLTech, LTIMindtree and Mphasis also saw losses of over 2 percent. Tech Mahindra showed slightly better performance but still fell around 1.59 percent.
Weakness Across Other Sectors
Apart from IT, some other sectors also showed weakness. PSU Bank and FMCG indices declined by up to 1 percent.
The overall market remained volatile during the session, with investors showing caution across sectors.
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Why IT Stocks Are Falling?
The main reason behind the fall is growing concern about the impact of generative AI. Experts believe AI can reduce the need for traditional IT services such as application development, testing and maintenance.
These services form a large part of IT companies’ revenue. If AI replaces some of these tasks, it may affect future earnings.
Nvidia CEO’s Statement Adds Pressure
Recent comments by Nvidia CEO Jensen Huang have also added to market worries. He said that “physical AI has arrived” and suggested that many industries will become robotics-driven in the future.
He also projected that demand for advanced AI systems could reach $1 trillion in revenue by 2027. This signals a major shift in technology trends.
Profit Booking Seen In IT Stocks
After strong gains in the past, investors are also booking profits in IT stocks. The combination of high valuations and new technology risks has led to selling pressure.
