India's IT shares near three‑year low as OpenAI move revives AI fears

OpenAI logo | Photo Credit: Dado Ruvic

India's IT shares fell to ‌a three-year low on Tuesday as investor jitters around the threat posed ​by artificial intelligence to flagship IT firms flared ⁠up again, after OpenAI announced a new AI venture.

The Nifty IT index fell 3.6% to its lowest since May 2023, with Tata Consultancy Services, Infosys , HCL Technologies ‌and Wipro falling between 2.5% and 4%.

Analysts at HSBC said in a Tuesday note that India's top-tier IT firms largely failed ‌to meet street expectations for earnings in March quarter as well ‌as ⁠in their outlooks for the new financial year, adding that ⁠strong spending globally on AI could be "crowding out" demand for traditional IT services.

HSBC's warning comes a day after OpenAI said it is launching a new company backed by more ​than $4 billion, embedding engineers into organizations ‌to identify where AI can make the most impact. It's the latest challenge to Indian IT firms' business model from a major AI company targeting enterprise clients.

Indian IT stocks are unlikely to attract positive investor interest ‌unless global AI activity, cloud capex growth and cloud revenue ​momentum slow, HSBC said.

Indian IT companies derive a significant share of their revenue from North America and are considered sensitive ⁠to U.S. economic uncertainty and corporate technology spending trends.

The industry has been under pressure for much of 2026, starting with a February rout after ‌the roll-out of Anthropic's Claude Code and on fears rapid advances in generative AI would disrupt demand for traditional IT and professional services.

India's IT stocks have slid 25.4% so far this year, making them India's worst-performing sector, compared with a 9.7% drop in the benchmark Nifty 50.

March quarter results have done little to soothe investor worries. Dollar revenue at industry ‌bellwether Tata Consultancy Services shrank 0.5% year-on-year to $30 billion for the year ended March - the ​first decline since the company's 2004 IPO.

Industry peers have flagged challenges of meeting targets with limited visibility on demand: HCL Tech's ⁠CEO C Vijayakumar said in the company's post-earnings investor call it took "25%-30% more ⁠effort to convert and get to the same number" in terms of total contract value.

The broader Indian market remained under ‌pressure on Tuesday, with the rupee sliding to a record low on elevated crude oil prices with talks to end the U.S.-Israeli war ​with Iran finding no success.

Published on May 12, 2026