AI Impact On IT Shares: The crisis in IT companies is continuously increasing. The business model of this industry seems to be under threat, due to which a decline in income may be recorded. Due to this sentiment, there has been a huge decline in IT shares in the last two days. Shares of companies like IT giant TCS, Infosys, HCLTech, Wipro and Tech Mahindra have completely crashed. These shares fell by up to 6 percent in the last trading session of the week.
There was a huge decline in the domestic stock market in Friday’s trading, mainly due to heavy selling in IT shares. According to the latest data, shares of major IT companies like Infosys Limited, Tata Consultancy Services, HCL Technologies Limited and Persistent Systems Limited fell by up to 5.58 percent.
Why the sudden fall in IT stocks?
The weakness in IT stocks came amid concerns of AI-led disruption and the continued decline in US tech stocks, which saw strong profit-booking in large-cap and mid-cap companies.
Turmoil continues in IT companies
Kranti Bathini, Equity Strategist, Wealthmills Securities, said that Indian IT companies are going through a turbulent phase. All major and midcap IT companies are currently booking profits, and their shares are seen falling in the medium to short term. The American market including Nasdaq is also going through a phase of improvement at this time.
Big challenge before these companies
Indian IT companies were stable for the last few years, but now suddenly with the advent of new features like AI, these companies have not been able to adopt new technology. Now is the time for Indian IT companies to embrace the changes and transform their business models to suit the disruption happening in the tech industry. Experts say that the companies which adopt these changes sooner, they have greater chances of survival. Rest of the companies may have to face challenges.
What should investors do
Some market experts say that the sector may remain volatile in the near future, investors should avoid panic selling and wait for the situation to normalize, as this correction may provide an opportunity to buy some IT stocks from a long-term perspective. Bathini further said that investors with high risk appetite and medium to long term perspective can invest in Indian IT companies from time to time keeping in mind the global actions and changes being made by these companies in their business models. Whereas for mid and short term investors, it is better to stay away from IT sector.
Investors advised to wait
VK Vijayakumar, chief investment strategist at Geojit Investments, said the actual impact of the AI crisis on the IT sector is not yet fully known. It would not be appropriate to do panic selling in IT shares at this time. Investors should wait until the situation becomes normal.
Also read: Share Market: Earthquake in the stock market… IT sector fell flat, Sensex fell by 772 points, Nifty also fell.
20% fall in Nifty IT
The Nifty IT index has fallen more than 20 per cent from its recent high due to continued heavy selling in IT stocks. Infosys Limited, Tata Consultancy Services (TCS), HCL Technologies Limited And shares of major IT companies like Persistent Systems Limited also witnessed a huge fall on Friday.
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