The domestic indices are trading firmly in bullish territory today (April 10) but the Nifty IT index continues to face selling pressure. In today’s trading session, the index is down around 3%, with almost all constituent stocks trading in the red, declining in the range of 1% to 3%.
Broad-based sell-off: IT stocks under pressure
In intraday trade, the Nifty IT index fell as much as 3%, with heavyweights dragging the sector lower. Tata Consultancy Services declined around 3%, while Infosys also dropped close to 3%. Mid-tier IT firms like Coforge saw sharper cuts of about 3%, and Mphasis slipped around 2%.
Among other names, HCLTech fell nearly 2%, while Tech Mahindra and LTIMindtree declined around 1.7% each. Persistent Systems also saw mild selling pressure.
However, the only stock in the tech sector that managed to bunk the trend was Wipro, a marginal gain of about 0.40%.
Let’s take a look at the three key reasons behind this sharp fall –
Cautious signals from TCS earnings
One of the key trigger behind today’s fall in the tech stocks has been the post reaction to the Q4 earnings of Tata Consultancy Services.
The Tata Group IT major posted a 12% year-on-year rise in net profit to Rs 13,718 crore. Meanwhile, the revenue grew 10% to Rs 70,698 crore. Furthermore, the company also announced a final dividend of Rs 31 per share.
However, the key concern for the market was its cautious tone on client spending.
The company highlighted that demand remains uneven, with no clear signs of a sharp pickup.
Following the result, the brokerages outlook remain mixed for TCS. According to brokerage firm Nomura, the near-term demand environment remains uneven, but it has slightly raised its target price to Rs 2,930 from Rs 2,840, indicating a potential upside of around 13% from current levels.
Domestic brokerage Motilal Oswal Financial Services has maintained a more optimistic stance. It reiterated its ‘Buy’ rating on TCS with a target price of Rs 3,000, suggesting a potential upside of about 16%.
On the other hand, global brokerage Jefferies has taken a cautious view. It maintained its ‘Underperform’ rating on the stock, stating that there is “nothing to cheer” in the current outlook, and set a target price of Rs 2,275, implying a downside of nearly 12%.
AI disruption fears return to the spotlight
Another major factor weighing on IT stocks is the rising concern around artificial intelligence. Rapid developments in generative AI are raising questions about the future of traditional outsourcing models.
The worry is not that IT services will disappear overnight. It is about the nature of work could gradually change.
For instance, tasks that once required large teams could increasingly be handled by automation and AI tools. This has created concerns about the potential reducing demand for manpower-heavy contracts.
The ‘Mythos effect’ and global tech shifts
The latest trigger for these fears comes from developments in the global AI space. Anthropic has introduced new capabilities through its AI ecosystem, including updates to its Claude platform.
More importantly, it has previewed a new model called Mythos, which is said to be stronger than earlier versions on coding and security tasks. The rollout is currently limited under a controlled programme, but it already includes partnerships with major global players like Amazon Web Services, Apple, NVIDIA, Google, and Microsoft.
