Why Did Wipro, Infosys, and TCS Crash by Up to 5% in Today’s Session?

Synopsis: Shares of Wipro, Infosys, TCS and other IT majors slid up to 5% after weak US ADR performance and growing fears that rapid AI adoption could impact long-term growth, margins, and sector valuations.

IT stocks witnessed a steep sell-off in today’s market session as negative global cues and rising concerns over the long-term impact of artificial intelligence unsettled investor sentiment. The broad-based weakness across frontline IT names led to a sharp decline in the Nifty IT index, which fell by nearly 4.5% during the day. 

Nifty IT plunged 4.8% in today’s session to 33,408.15, slipping from its previous close of 35,095.15. The index has now declined 7.5% over the past week, dropped 12.5% in the last month, and is down nearly 20% compared with a year ago.

News

Indian IT stocks witnessed a sharp sell-off, with Wipro down 4.5%, Infosys slipping 5%, TCS falling 4.5%, Persistent Systems losing 4.5%, and HCL Tech declining 4.5%. The weakness reflects heightened investor anxiety around the long-term impact of artificial intelligence on traditional IT services and software business models. 

Other IT stocks such as Oracle Financial Services, Coforge, L&T Technology Services, and Mphasis also came under pressure, underscoring concerns of a sector-wide slowdown rather than company-specific issues.

The nervousness was triggered overnight in the US markets, where ADRs of Indian IT companies fell sharply. Infosys ADR dropped 5%, Wipro ADR declined 4.5%, and Cognizant ADR fell 4.9%, signaling global investors growing discomfort with the sector. The weakness in ADRs often sets the tone for domestic trade, leading to follow-through selling in Indian markets.

Adding to the cautious sentiment, US technology stocks showed signs of stress, with the Nasdaq 100 giving up most of its intraday gains. Meanwhile, the CBOE Volatility Index hovered around 18, indicating rising uncertainty and risk aversion among investors, especially toward growth and technology stocks.

At the center of the market’s anxiety is US AI startup Anthropic, which recently launched 11 new plug-ins for its Claude Cowork AI agent. These tools are designed to automate tasks across legal, sales, marketing, compliance, and data analysis functions, areas that have traditionally driven demand for IT services and enterprise software. The development has intensified fears that AI could reduce the need for large teams, custom software development, and outsourced IT services.

Market experts caution that the worry is not about immediate earnings, which remain strong for many IT companies, but about long-term valuation risks. Analysts describe this as a “terminal multiple problem”, where investors fear that rapid AI adoption could permanently cap growth, increase competition, compress margins, and weaken the long-term profitability outlook for traditional IT services companies.

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