The month of February has been no less than a nightmare for the Indian IT sector. The growing impact of Artificial Intelligence (AI) and fears of automation led to such a selloff in tech stocks that investors lost thousands of crores of property. After a month-long decline, some relief was seen on February 25, but the figure of loss is shocking.
Nifty IT fell 21%
The Nifty IT index has fallen nearly 21% so far in February, which is considered to be the worst monthly performance in almost 23 years. IT companies have more than 10% weightage in the benchmark index, so this has impacted the entire market. All 10 IT stocks are down 17% to 27%. Coforge was the biggest loser, falling about 26.8%. There was also a sharp decline in Tata Consultancy Services and Infosys.
Big impact on the assets of LIC and mutual funds
This decline in IT shares has had a direct impact on institutional investors. According to the data, mutual funds have suffered a loss of around ₹64,000 crore and LIC has suffered a loss of around ₹37,000 crore. That means overall value of more than ₹ 1 lakh crore was erased. Infosys proved to be the biggest wealth destroyer. This single stock wiped out around ₹26,000 crore from the portfolio of mutual funds. The fall of TCS also resulted in a loss of more than ₹9,000 crore. Wipro, HCL Technologies and Tech Mahindra also wiped out big wealth.
Why are IT shares falling?
The biggest fear for the nearly $300 billion Indian IT services sector is that AI could reduce project timelines, impact deal flow and hurt labour-intensive models. New AI tools from American companies have increased the pace of automation. Besides, slow economic growth in America and Europe, delay in Fed rate cut and caution in IT budget have also increased the pressure. Some brokerages believe that if AI applications make a dent in services earnings, revenue growth could be hit by up to 2% annually in the coming 3-4 years.
Latest Business News