Nifty IT plunges 12% in Sept, ends in red in 16 of 20 sessions; what fuelled the sell-off

The Nifty IT index has fallen nearly 12% in September, ending lower in 16 of 20 trading sessions. The sell-off has been driven by a combination of US policy uncertainty, weak growth, margin pressure and concerns over the impact of artificial intelligence on traditional IT services. The decline is nearly twice the 6% fall in the benchmark Nifty 50 so far this month.

IT stocks witnessed selling pressure amid concerns over the US interest-rate outlook and reports of higher levies on IT remittances and a sharp increase in H-1B visa fees. The concerns are significant for Indian IT companies, given their high dependence on the US for both revenue and talent deployment. Investors are worried that higher visa and operating costs could put further pressure on margins.

The Nifty IT index rose in just four sessions this month - 0.98% on September 1, 0.11% on September 11, 2.19% on September 15 and 0.23% on September 17. Its steepest fall came on September 9, when the index dropped 3.24%.

Which IT stocks saw the steepest fall?

The Nifty IT index saw broad-based selling, with LTIMindtree, Oracle Financial Services Software (OFSS), Coforge, Wipro and Tata Consultancy Services (TCS) emerging as top laggards, all posting double-digit losses.

LTIMindtree has fallen 15.81% in September, while OFSS, Coforge, Wipro and TCS have declined 14.63%, 14.52%, 13.35% and 13.22%, respectively.

Mphasis, Persistent Systems and Infosys have also lost more than 11%. HCLTech and Tech Mahindra are down 7.15% and 7.95%, respectively.

Extend eight-session losing streak on Tuesday

The selling pressure continued on Tuesday, with the Nifty IT index closing at 27,710.40, down 1.34% and extending its losing streak to eight sessions. Eight of the 10 index constituents ended lower today.

TCS, the country’s most values IT stock, fell 1.85% to ₹2,032.40, while Wipro dropped 2.95% to ₹156.79, hitting a fresh 52-week low. HCLTech declined 2.44% to ₹1,222, while Tech Mahindra fell 2.06% to ₹1,510.50.

Among mid-cap IT stocks, LTIMindtree fell 3.80%, Mphasis 3.71%, OFSS 3.65%, Persistent Systems 3.12% and Coforge 2.88%. Infosys was the only major stock to buck the trend, gaining 1.22% to ₹1,015.40.

Growth slowdown, AI concerns

Beyond US policy risks, investors are increasingly worried about the sector's growth outlook as discretionary technology spending remains weak and AI-led automation puts pressure on traditional services.

Prathamesh Kadival, Research Analyst at Bonanza, said weak operating momentum is adding to the pressure. TCS grew just 0.4% sequentially in constant currency in Q1 FY27, while Infosys grew 1%. TCS margins also came under pressure following wage hikes, while Infosys cut its FY27 revenue guidance.

“Real growth is near a standstill and earnings momentum is fading,” Kadival said.

Vikram Kasat, Chief Business Officer-Advisory & Dealing at PL Capital, said the market is pricing in a prolonged period of subdued growth.

“Nifty IT’s 11% fall in September-nearly double the Nifty’s decline-is the market pricing in a fourth straight year of low-single-digit growth, not a one-quarter blip,” Kasat said.

According to Kasat, clients are shifting discretionary budgets from legacy services towards AI, while productivity gains are shrinking the traditional effort-based revenue pool faster than new AI revenue is replacing it.

Q2 earnings in focus

The September-quarter earnings season will be the next key trigger for IT stocks. Investors will track discretionary spending, deal wins, margins and management commentary on FY27 growth.

The key question for the sector will be whether AI-led demand can offset the slowdown in traditional IT services and support a recovery in revenue growth.

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