Information technology stocks came under selling pressure after International Business Machines (IBM) reported weaker-than-expected second-quarter earnings, leading to a sharp fall in its share price and weighing on global technology stocks.

The Nifty IT index declined during the session, with Infosys, Tata Consultancy Services (TCS), and Persistent Systems emerging among the top losers, falling by as much as 1%. The weakness reflected investor concerns that slower enterprise technology spending could impact the outlook for Indian IT service providers, which derive a significant portion of their revenue from overseas markets.

IBM reported preliminary second-quarter revenue of $17.2 billion, missing analysts' expectations of $17.9 billion. The company's infrastructure business, which includes mainframe computers, recorded a 7% decline in sales as customers redirected spending toward chips, servers, storage, and memory amid continued artificial intelligence-driven supply constraints.

Following the earnings announcement, IBM shares plunged 25%, marking the company's steepest single-day decline in several decades. The weak results also pressured other global technology companies before broader markets recovered later in the trading session.

IBM Chief Executive Officer Arvind Krishna said the company had anticipated supply chain challenges but underestimated the extent to which customers would shift capital spending toward hardware purchases. He acknowledged that several large customer deals failed to close as expected, particularly those related to IBM's Z mainframe platform and associated software offerings.

Despite the weakness in technology stocks, Indian equity benchmarks traded higher after softer-than-expected US inflation data improved global risk sentiment. Lower inflation has strengthened expectations that the US Federal Reserve may avoid near-term interest rate hikes, reducing pressure on emerging markets such as India and supporting foreign portfolio investment flows.

Although the broader market remained resilient, the reaction in IT stocks highlighted investor sensitivity to global technology demand, as earnings from major international technology companies continue to influence sentiment toward India's export-oriented software sector.