India's IT shares fell to a three-year low on Wednesday as renewed investor fears that artificial intelligence could hurt traditional tech firms deepened a sell-off in the sector. The Nifty IT index dropped 3.6% to its lowest level since May 2023, while India IT stocks are down 25.4% year to date. [1]
OpenAI's announcement on Tuesday of a new company backed by more than $4 billion added to pressure on Indian IT firms' business model, according to the report. HSBC analysts said the sector was being "crowd[ed] out" as clients weigh fresh AI tools against older outsourcing contracts, while HCLTech CEO C Vijayakumar said firms may need "25%-30% more effort to convert and get to the same number." [1]
Asian stocks also fell on Wednesday as markets reacted to Middle East tensions and setbacks around AI technology. In South Korea, the Kospi plunged as much as 5% on Tuesday after a top official proposed a social tax on AI profits, and Samsung Electronics shares fell as much as 6.1% after labour talks collapsed. [2]
The pressure on Indian IT names came after Tata Consultancy Services, the country's largest software exporter, reported dollar revenue of $30 billion for the year ended March, down 0.5% from a year earlier. The stock weakness left investors focused on whether AI will erode demand for conventional tech services and on how quickly firms can adapt their sales pitch to the new market. [1]
Markets will stay focused on further signals from AI companies and on any fresh developments in Middle East diplomacy, with regional stocks already reacting sharply to both. [2]
