Infosys and HCL Technologies lead Indian IT sector rout as AI disruption fears mount.

Indian information technology stocks tumbled sharply on Friday, with the NIFTY IT sub-index falling over 2.7% to a near-month low. Infosys dropped nearly 7%, following a 6% decline Thursday, while HCL Technologies slumped over 6%. Wipro and Tech Mahindra also fell between 4% and 6%. The sell-off reflects deepening concerns that rapid advances in generative AI tools could erode demand for traditional labor-intensive outsourcing contracts, a core revenue driver for Indian IT firms.

Sentiment was further pressured by overnight declines on Wall Street and persistent strength in U.S. economic data, dampening expectations for near-term Federal Reserve rate cuts. This combination of AI-driven disruption fears and global market weakness pressured growth-oriented technology stocks globally.

The sector's sharp decline underscores the vulnerability of Indian IT firms to technological shifts and macroeconomic headwinds.