Why Are IT Stocks Falling Today? Global Tech Rout, AI Fears and US Earnings Jitters Drag Indian IT Shares

Indian IT stocks are under sharp pressure on February 4, 2026, emerging as the weakest sector on Dalal Street even as benchmark indices trade marginally higher. The IT index has slipped close to 6% intraday, prompting investors to ask why technology stocks are falling today despite a supportive broader market environment.

The answer lies not in domestic fundamentals, but in a combination of global tech weakness, rising uncertainty around artificial intelligence, and caution ahead of key US earnings.

A Sector-Specific Sell-Off, Not a Market Collapse

Indian equity markets opened mixed to positive this morning, extending momentum from Monday’s strong rally driven by the India–US trade agreement. Sensex and Nifty held onto gains in early trade, supported by selective buying in heavyweight stocks. However, IT shares moved sharply in the opposite direction.

This divergence makes one thing clear: today’s decline is not a broad market fall, but a sector-specific correction. Investors are rotating out of IT even as they remain constructive on the overall market.

Global Tech Weakness Is Spilling Into Indian IT Stocks

The primary reason IT stocks are falling today is the overnight sell-off in US technology stocks. Wall Street turned cautious as investors reassessed growth expectations for global tech companies amid intensifying competition in artificial intelligence and concerns about slowing enterprise spending.

Because Indian IT companies generate a large share of their revenues from the US, any weakness in US tech sentiment quickly transmits to Indian markets. As US tech valuations came under pressure, Indian IT stocks followed suit, regardless of domestic cues.

AI Disruption Fears Are Clouding Near-Term Visibility

Another factor weighing on IT stocks is rising uncertainty around how fast AI adoption could disrupt traditional IT services. While artificial intelligence presents a long-term opportunity, markets are currently focused on the near-term risks.

Investors are concerned that automation and AI-driven efficiency could reduce demand for manpower-intensive outsourcing contracts. There is also apprehension around pricing pressure as global clients push for cost optimisation. Until there is clearer evidence of large-scale AI monetisation, IT stocks are likely to remain sensitive to negative global headlines.

Earnings Jitters Ahead of Key US Tech Results

Caution ahead of earnings from major US technology companies has added to selling pressure. Investors are reluctant to take aggressive positions in IT stocks before gaining clarity on global tech spending trends.

Any indication of slower budgets, delayed digital transformation projects, or conservative guidance from US tech majors could directly impact deal pipelines for Indian IT firms. This uncertainty has encouraged short-term traders to cut exposure, intensifying today’s fall.

Heavyweight IT Stocks Lead the Decline

The selling pressure has been broad-based across large-cap IT names. Infosys, Tata Consultancy Services, and Wipro have all faced notable declines, reflecting concerns around growth visibility rather than company-specific negatives.

The weakness has also spilled into mid-cap IT stocks, reinforcing the view that the move is driven by sector sentiment rather than isolated stock-level issues.

Profit-Booking After a Volatile Market Phase

The recent sharp rally in Indian markets has also played a role. After Monday’s strong move, investors are becoming more selective, particularly in sectors trading at premium valuations. IT stocks, which had earlier benefited from defensive positioning, are now facing profit-booking as capital rotates toward policy-driven and infrastructure-linked themes.

This rotation is normal in volatile markets and often leads to exaggerated moves in high-beta sectors like IT.

Is This a Structural Breakdown or a Sentiment Reset?

For now, the fall in IT stocks appears to be sentiment-driven rather than structural. There has been no fresh negative commentary from Indian IT companies, and long-term digital transformation trends remain intact.

However, near-term volatility may persist until global tech markets stabilise and earnings clarity improves. Investors will be watching US tech commentary closely, along with currency movements and global bond yields, to assess whether pressure on IT stocks deepens or eases.