Market volatility has intensified for Indian IT giants as global economic cues and structural industry shifts weigh on investor sentiment. Infosys saw its American Depositary Receipts (ADRs) slump by more than 7% in early trading on February 12, 2026, reaching an intraday low of $14.59. This sharp decline mirrored the performance of Wipro, whose ADRs fell 5.4% to $2.26. The downward pressure followed a significant sell-off in the domestic Nifty IT index, which shed 5.5% in a single session, eroding approximately ₹1.3 lakh crore in market capitalization across the sector. External pressures from the U.S. labor market have acted as a primary catalyst for this retreat. Recent employment data showed a stronger-than-expected January, cooling hopes for imminent interest rate cuts by the Federal Reserve. Sustained high interest rates typically compression the valuations of growth-heavy sectors like technology. Consequently, the Nasdaq Composite dropped over 1%, while major tech names like Cisco tanked 11%. Beyond macroeconomic factors, the sector is grappling with a profound structural transition. Artificial Intelligence is fundamentally altering the traditional headcount-based outsourcing model. While AI deals now represent nearly 74% of new contracts, there are growing concerns regarding "outcome-based" pricing and the automation of routine tasks. Analysts warn that while AI-first strategies drive long-term competitiveness, they may create near-term headwinds for revenue growth and recruitment. Despite the current price correction, long-term industry projections remain ambitious. The Indian IT sector is expected to reach $350 billion by the end of 2026, contributing nearly 10% to the national GDP. Global IT spending is also forecasted to grow by 10.8% this year, totaling $6.15 trillion. Investors are now closely monitoring deal flow and margin resilience. Wipro recently reported a stable operating margin of 17.6%, its best in several years, while Infosys continues to leverage a large-deal pipeline, including a $4.8 billion contract value high. However, both firms face a bearish technical outlook in the short term, with stocks trading below key moving averages as the market recalibrates for a higher-for-longer interest rate environment.