Markets Calm, IT Turbulent: India VIX Falls But Tech Stocks Stay Under Pressure

Among the biggest losers were Coforge and Wipro, down 3.58 per cent and 2.07 per cent, respectively, as of 10:15 am. The weakness in the IT pack has been severe and persistent.

The sell-off coincided with foreign portfolio investor (FPIs) outflows from Indian IT stocks jumping to a seven-month high.

Source : ABPLIVE AI

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Key points generated by AI, verified by newsroom

• Indian equity markets rose, but IT stocks faced significant pressure.
• IT sector weakness linked to AI's potential impact on coding.
• Foreign investor outflows from IT stocks reached a seven-month high.

The Indian equity benchmarks traded higher on Tuesday, extending the rebound seen in the previous session. The Nifty gained around 0.5 per cent and moved back above the 23,500 mark, while India VIX declined more than 5 per cent, indicating a temporary easing in market nervousness. Yet, even as the broader market attempted a recovery, one pocket remained firmly under pressure: information technology. The Nifty IT index slipped nearly 1.5%, with all its constituents trading in the red.

Among the biggest losers were Coforge and Wipro, down 3.58 per cent and 2.07 per cent, respectively, as of 10:15 am. The weakness in the IT pack has been severe and persistent. In February 2026, the Nifty IT index recorded its steepest monthly fall since September 2008, dropping nearly 20 per cent. The sell-off coincided with foreign portfolio investor (FPIs) outflows from Indian IT stocks jumping to a seven-month high.

Much of this pressure appears to have been driven by concerns over how artificial intelligence could reshape the economics of software development and challenge India’s long-standing cost advantage in global IT services. Sentiment worsened after a report by Citrini Research flagged the disruptive potential of “agentic AI”, arguing that the marginal cost of coding could fall dramatically, potentially undermining the relevance of large-scale developer-based delivery models. That argument triggered what many in the market described as an AI-led panic trade across Indian IT names.

Technically, the damage is equally striking. The daily 14-period RSI for the Nifty IT index has fallen below 15, its lowest reading since the post-Covid sell-off and one of the weakest momentum signals seen in nearly six years. On the weekly chart too, the RSI has dropped to levels last seen during the Covid-driven market correction, placing the index deep in oversold territory.

So far in calendar year 2026, the Nifty IT index is down 24.5 per cent. The weakness is not new either: the index had already delivered a negative return of 12.5% in 2025. With RSI in oversold territory, the possibility of a technical pullback or relief rally might be possible. However, any durable recovery is likely to depend less on oversold readings and more on management commentary, deal pipelines, margin outlook, and the sector’s ability to reassure investors that AI will be an enabler rather than a structural threat.

(Disclaimer: This article uses information originally published by Dalal Street Investment Journal (DSIJ). The views expressed are those of the original authors and not necessarily of ABP Network Pvt. Ltd. This content is provided for general informational and educational purposes only and should not be construed as investment, financial, legal or tax advice. Readers are advised to conduct their own research and/or consult a qualified financial advisor before making any investment decisions. This content is for informational purposes only and should not be treated as investment advice. ABP Network, its employees and associates shall not be responsible or liable for any losses or damages arising directly or indirectly from the use of or reliance on this article or any information contained herein.)

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