IT Stocks Crash: ₹3.11 Lakh Crore Wiped Out as AI Fears Grip Dalal Street

IT Stocks: Friday was nothing short of terrible day for the Indian stock market. The wave of recession originating from Wall Street wreaked such havoc on Dalal Street that the Nifty IT Index plummeted by 5.2% in a single day.

The IT index has seen a massive decline of 15.4% in February 2026, raising fears among investors about whether this is a harbinger of the Great Depression of 2020. The massive ₹3.11 lakh crore loss in the market cap of giants like TCS, Infosys, and Wipro has raised the serious question: Is the growing influence of Generative AI proving fatal for the traditional IT service model?

Wall Street’s Threat and Dalal Street’s Fall

Tech stocks rallied as soon as the market opened on Friday, largely triggered by the widespread selling in US markets on Thursday night. This had a direct and devastating impact on India’s Nifty 50 and Sensex, where both key indices plunged more than 1% from their intraday lows. However, the IT sector suffered the most, with the index falling nearly 12% in the past three sessions.

This decline is so deep and alarming that it has become the worst monthly performance since March 2020. Investors are deeply concerned that US companies are drastically cutting their IT budgets due to fears of a recession, a direct consequence of which is being borne by Indian outsourcing companies.

Infosys and TCS

Infosys led the market rout, with its shares falling 6.3% to a one-year low. However, the most shocking and heartbreaking figures came from TCS, where this Tata Group giant lost approximately ₹1,28,800 crore from its market cap in one stroke. Due to this, TCS’s market cap fell to ₹9.35 lakh crore, and this massive decline pushed the company from fourth place to fifth in the valuation race.

Similarly, Infosys’ market cap also declined by 15%, falling to ₹91,431 crore. HCL Technologies suffered a massive loss of ₹53,647 crore, and Wipro ₹22,762 crore. Tech Mahindra also could not escape this fire, suffering a loss of ₹15,233 crore.

Why is the IT sector scared

The decline in the US market is not the only reason behind this massive sell-off; it is also linked to the rapid growth of Artificial Intelligence, which is now becoming frightening. Market experts believe that traditional tasks like coding, software testing, and maintenance, which previously required thousands of employees, are now being accomplished in much less time and at minimal cost with the help of smart AI tools.

Investors are now deeply concerned that the traditional IT model is on its last legs. Clients are demanding an “AI-first” approach instead of the old service model, which is directly impacting companies’ profit margins. While some analysts also say that companies that quickly adopt this change will open new doors for growth, a cloud of uncertainty currently shrouds the entire sector.

Stocks at one-year lows

Not only the major giants, but also mid-sized and large-cap stocks like Coforge, Oracle Financial Services, and HCL Technologies saw declines of more than 5%. The decline of companies like Infosys, Wipro, and TCS to their one-year lows clearly indicates that the market is still struggling to find its bottom. Technical charts are also forming extremely weak patterns, pointing to more volatility and fluctuations in the coming weeks. Until US markets show strong signs of recovery, fresh purchases in Indian IT stocks could prove risky.