Nifty IT Index Falls Over 3.5% As OpenAI’s New AI Venture Weighs On Tech Stocks

Technology stocks saw steep sell-offs on May 12 following OpenAI's decision to set up a new artificial intelligence deployment firm with funding in excess of $4 billion. The Nifty IT index fell 3.7%, marking its lowest level since May.

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The 10 components of the Nifty IT index closed in the red amid investor fears about rising AI disruption in the tech services industry.

Persistent Systems emerged as the top loser among IT stocks, falling up to 5%. Tata Consultancy Services (TCS) declined 4.27%, while LTIMindtree slipped 3.96%.

Infosys, Tech Mahindra, HCL Technologies, Wipro and Coforge also declined between 2% and 4%.

OpenAI Announces New AI Deployment Company

OpenAI said in a public statement on Monday that the new company will focus on helping organisations build and deploy AI systems across complex business environments.

According to the statement, the company will deploy specialised engineers to work directly with businesses, operators and frontline teams to redesign workflows and integrate AI into operations.

The announcement triggered concerns over the future demand outlook for traditional IT services companies, particularly firms with large exposure to outsourcing and legacy technology operations.

HSBC Report Adds Pressure On IT Stocks

Investor sentiment was also impacted after HSBC flagged weak earnings outlooks for Indian IT companies in a recent report.

The brokerage said fourth-quarter earnings and FY27 guidance from several large IT firms missed expectations. HSBC also noted that rising spending on artificial intelligence globally could reduce spending on conventional IT services.

India’s IT industry, valued at nearly ₹26.3 lakh crore, derives around 57% of its revenue from the U.S. market.

Investors also remained cautious ahead of the U.S. consumer price index (CPI) data scheduled later in the day. Market participants are closely tracking inflation trends for signals on the U.S. Federal Reserve’s interest rate decisions.

Higher interest rates in the U.S. can impact technology spending and delay discretionary projects for Indian IT companies.

Oil Prices And Global Concerns Add To Weakness

Global concerns around inflation also weighed on sentiment after crude oil prices rose nearly 1% amid continued tensions in West Asia.

Reuters reported that several global brokerages, including Goldman Sachs and BofA Global Research, have scaled back expectations of U.S. rate cuts this year due to elevated inflation and higher energy prices.

The Nifty IT index has now declined nearly 4.5% over the last two trading sessions as investors continue to assess the impact of AI-led disruption and global macroeconomic uncertainty on the sector.