Rs 19 lakh crore shocker! TCS, Infosys & 2 IT giants crash 50% from peak: Is the absolute worst yet to come?

The Indian IT sector's brutal correction has crossed a grim milestone, with the four largest stocks in the pack — TCS, Infosys, Wipro and LTIMindtree — now down at least 50% from their respective all-time highs. The carnage has erased nearly Rs 19.28 crore in combined market capitalisation across 10 major IT companies from their peak values, with both TCS and Infosys trading at their lowest levels since 2020.

TCS, the country's largest IT services firm, has been hit the hardest. The stock has crashed about 56% from its all-time high of Rs 4,592.25 hit on August 30, 2024, to Rs 2,033 on Tuesday. This single stock has seen its market cap shrink from a peak of Rs 16,47,586.60 crore to Rs 7,35,557 crore, a wealth erosion of over Rs 9.12 lakh crore.



Wipro is not far behind, down 54% from its peak of Rs 369.93 touched on October 14, 2021, with the stock now at Rs 170.35. LTIMindtree has fallen over 53% from its all-time high of Rs 7,588.80 recorded on January 4, 2022, and now trades at Rs 3,543.

Infosys, the bellwether for India's IT sector, has also lost nearly 50% from its peak of Rs 2,006.45 hit on December 13, 2024, with the stock currently at Rs 1,006, its market cap nearly halving from Rs 8,30,324.82 crore to Rs 4,08,192 crore.

Among the rest of the pack, HCL Tech has slumped 47% from its January 2025 peak, Persistent Systems is down 36%, Mphasis has corrected 41%, and Tech Mahindra, which hit its all-time high as recently as February 3, 2026, has already fallen 24%.

Also Read | Explained: Why Accenture's warning sparked a Rs 1.35 lakh crore meltdown for TCS, Infosys, other IT stocks

Who’s behind the trouble in IT?
This capitulation is driven by a double whammy of immediate macroeconomic stress in North America, the primary revenue engine for Indian IT, and an existential threat posed by generative artificial intelligence.

"Accenture’s results provide no solace to a sector beleaguered by multiple headwinds and the risk of higher AI deflation from sharp GenAI capability increase in software tasks," warned Kawaljeet Saluja of Kotak Institutional Equities. Commenting on Accenture's muted revenue growth, downward revision of fiscal 2026 guidance to 3–4%, and declining year-over-year bookings, Saluja identified "incremental headwinds to growth led by the Middle East conflict, with indirect impact focused more on discretionary spending and product vertical," noting that Infosys could be a tad more vulnerable than its Tier 1 peers.

The threat of high inflation and aggressive monetary policy in the United States continues to stifle enterprise spending. A hawkish tone from the US Federal Reserve has fueled worries about prolonged cuts to discretionary budgets. Traders are currently pricing in about a 64% chance of a September rate hike and expect three rate increases this year, according to the CME FedWatch Tool. Because Indian IT firms derive the lion's share of their business from North American corporate capital expenditure, these macroeconomic shocks translate directly into muted financial pipelines.

"The market is effectively pricing in slower revenue growth, lower pricing power, uncertainty around AI’s impact on staffing and weaker margins over the next 12–24 months," said Ankur Punj, MD & Business Head at Equirus Wealth. He expects management commentary to remain cautious, adding that while deal wins may improve, "conversion into revenue could stay slow. Earnings downgrades remain a risk."

Beyond cyclical delays, the deeper anxiety centers on whether the foundational business model of Indian IT is permanently broken. According to DBS Bank, AI disruption is now most visible in India’s large IT services and outsourcing sector, which has historically driven exports, employment, and equity performance. Generative AI is rapidly automating coding, customer support, and back-office processes, directly threatening the traditional labor-arbitrage model used by major Indian IT firms.

This disruption has triggered aggressive earnings downgrades and heightened volatility, even as it creates parallel opportunities in cloud infrastructure, data centers, and cybersecurity. DBS predicts a sharp sector divergence, where traditional outsourcing models face severe disruption while capital migrates to AI infrastructure and domestic capital expenditure.

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More de-rating ahead?
As valuation multiples compress, the debate on Dalal Street has shifted from an earnings collapse to a permanent de-rating of the sector.

"AI is not a temporary phenomenon. It is a structural change and has the potential to be disruptive," stated Mittul Kalawadia, Senior Fund Manager at ICICI Prudential AMC. Drawing a parallel to legacy media, Kalawadia noted, "Traditional newspaper companies, for example, continue to operate profitably despite digital disruption. However, their valuation multiples have compressed significantly over time. Something similar could happen in IT. Even if earnings remain resilient, valuation multiples could continue to de-rate."

While Kalawadia views the current correction as a contrarian opportunity backed by strong cash flows and improved dividend yields, he cautioned that it is not a landscape where investors can take very large bets, making position sizing critically important.

With nearly Rs 19.28 lakh crore in market value already gone, and the sector facing a confluence of AI-led structural disruption, a cautious US Fed, and weak read-throughs from global peers like Accenture, the consensus among market watchers appears to be that India's IT stocks may have further to fall before any durable recovery takes hold.

(Data: Ritesh Presswala)