Indian Software Stocks Dip as Citi Warns of Tough Road Ahead

Deep News12:11

India's Nifty IT index fell as much as 1.74% on Monday, giving back a portion of the 3.5% gain fueled by Salesforce last Friday. Citi cautioned that the outlook for software services firms remains challenging due to artificial intelligence disruptions and intensifying competition.

"The impact of AI is real in the medium term, though the pace could vary depending on multiple factors," wrote Citi analyst Surendra Goyal in a note. "The outlook for the IT services industry remains difficult, and one should remain cautious." He expects organic revenue growth for the sector to stay in the low single digits for the foreseeable future.

Growth continues to be dampened by fierce competition, AI-driven productivity gains, and faster expansion in GCC regions. "A trend emerging in IT services is that clients are leveraging AI for development, leaning more toward services over software—but so far, we have not seen much evidence of this," Goyal added.

Infosys shares slid as much as 2.4%, while HCL Technologies Ltd dropped 1.4% and Tata Consultancy Services fell 1.1%.

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