IT sell-off deepens: Infosys, Wipro ADRs slide as US tech rout and rate fears weigh

Selling pressure in global technology stocks spilled over to Indian IT counters listed in the US on Thursday, with Infosys and Wipro ADRs declining sharply amid a broader risk-off mood and concerns over interest rate outlook and AI-driven disruption in the sector.Infosys’ American Depositary Receipts (ADRs) fell more than 7 per cent to an intraday low of $14.59, while Wipro’s ADRs dropped 5.4 per cent to $2.26 in early trade. The fall followed weakness in domestic IT stocks and losses across major US technology names, according to an ET report.The broader US market was also under pressure, with the Nasdaq Composite sliding over 300 points, or more than 1 per cent. Around 11:11 AM ET (9:43 PM IST), the Nasdaq was at 22,764.90. The S&P 500 declined 0.6 per cent to 6,902.80, while the Dow Jones Industrial Average fell 249.27 points, or 0.50 per cent, to 49,872.10.Among individual stocks, Cisco dropped 11 per cent, while large-cap technology companies such as Apple, Nvidia and IBM were down by as much as 6 per cent during the session.Back home, Indian benchmark indices had already closed sharply lower earlier in the day, dragged down by heavy selling in IT stocks. The Nifty IT index ended 5.5 per cent lower, with all its 10 constituents closing in negative territory.The sell-off wiped out around Rs 1.3 lakh crore in market capitalisation across listed IT companies. Persistent concerns over AI-led disruption in the outsourcing business model, along with stronger-than-expected US jobs data that reduced hopes of near-term US Federal Reserve rate cuts, triggered the sharp fall.The Nifty IT index has now emerged as the worst-performing sectoral index, declining about 21 per cent over the last 12 months.Vinod Nair, Head of Research at Geojit Investments, said the latest decline in Indian IT stocks was largely driven by stronger-than-expected US employment data and a marginal fall in unemployment rate, which lowered expectations of early rate cuts by the US Federal Reserve. He added that concerns around AI-led disruption continue to weigh on sector sentiment.On AI risks, Nair told ET the technology is structurally changing Indian IT services by shortening delivery timelines and automating volume-driven work, putting pressure on the traditional headcount-based outsourcing model.“Layoffs are likely in routine-heavy areas as fewer people will be needed to deliver the same outcomes. Even ERP implementation, as highlighted by Palantir’s recent focus, is now vulnerable to AI disruption. Clients are shifting toward outcome-based pricing. In the coming quarters, AI adoption could create headwinds for deal wins, potentially impacting topline, making close monitoring of deal flow essential to assess its real impact,” he warned.