New Delhi, May 12 Indian IT stocks took a deep plunge on Tuesday, dragging the Nifty IT index down 3.73 per cent to its lowest level since May 2023 after OpenAI said it would launch a new company with $4 billion initial investment to help organisations build and deploy artificial intelligence.
A weak earnings outlook for the sector from analysts also impacted the sentiments with Nifty IT index extending losses for a second session.
It became the top sectoral loser on the National Stock Exchange, and fell nearly 4.5 per cent over the past two sessions with all 10 constituents trading lower.
The new OpenAI deployment company will embed engineers specialised in frontier AI into organisations working on complex problems in demanding environments. They will help redesign infrastructure and workflows, which investors feared could accelerate AI‑led disruption of traditional IT services.
LTIMindtree Ltd led the decline among index constituents, tumbling as much as 4.79 per cent, while Tech Mahindra and Persistent systems followed with dips of 4.43 per cent and 4.33 per cent respectively.
Tata Consultancy Services, Infosys, Tech Mahindra, HCL Technologies, Wipro and Coforge dropped between 3.12 per cent and 4.12 per cent.
An HSBC report had flagged slowing demand for traditional IT services and rising uncertainty over the US interest rate trajectory ahead of key inflation data, denting investor sentiments.
Higher US interest rates act as a headwind on IT stocks as they raise recession risks, which could make clients in key overseas markets cut technology spending and delay discretionary projects.
Analysts noted that fourth‑quarter earnings and FY27 outlooks from India’s top‑tier IT firms largely missed expectations.
Investors also preferred to be on the sidelines ahead of the US consumer price index (CPI) data expected soon, which could offer cues on the Federal Reserve’s future monetary policy path.
India’s IT sector valued at around Rs 26.3 lakh crore receives nearly 57 percent of its revenue from the US market.
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