Indian IT Stocks Crash Over 7% on Anthropic AI Fears, US Tech Sell-Off Deepens
Indian IT stocks witnessed a sharp sell-off on February 4, tracking heavy losses in US technology shares and rising concerns over rapid advances in artificial intelligence by AI startup Anthropic. The NIFTY IT index plunged over 7%, marking one of its steepest single-day declines in recent months, as investors worried about potential disruption to traditional IT services and software revenue models.
All 10 constituents of the index ended the session in the red, with heavyweights bearing the brunt of the selling pressure.
IT majors tumble as sentiment turns risk-averse
Shares of Infosys slid nearly 9% to ₹1,510.10, heading toward their worst single-day fall since April 2023. TCS declined more than 7%, while Tech Mahindra, LTIMindtree, and Coforge dropped around 7% each.
Other IT stocks including Mphasis, Persistent Systems, HCL Tech, and Wipro lost between 5–6%.
Adding to the pressure was a strengthening Indian rupee, which typically hurts export-oriented IT companies by compressing operating margins.
Wall Street rout spills over to Indian markets
The sell-off mirrored weakness in US technology stocks overnight. On Wall Street, Nvidia and Microsoft fell nearly 3%, while Alphabet slipped 1.2% and Amazon declined 1.8%. The Nasdaq Composite ended the session 1.43% lower.
Why Anthropic’s AI announcement rattled tech stocks
Market nerves intensified after Anthropic, the company behind the Claude family of AI models, unveiled new AI tools capable of automating tasks in areas such as legal research, compliance, marketing, and data analytics.
These services are traditionally high-margin segments for IT services firms and enterprise software providers. Investors fear that increased automation through agentic AI could weaken pricing power, disrupt volume-based billing, and challenge long-term subscription-driven revenue models.
Experts say pain may be selective, not structural
Despite the sharp correction, some market participants believe the sell-off is largely sentiment-driven.
Prasenjit Paul, Equity Research Analyst at 129 Wealth Fund, said the decline highlights a structural shift rather than an outright collapse of the sector. According to him, traditional headcount-led IT service models are under pressure, but specialised firms serving niche verticals such as healthcare, global OEMs, and regulated industries could emerge as long-term beneficiaries.
By integrating AI to decouple revenue growth from manpower costs, such firms could see margin expansion and potential valuation re-rating, he noted.
Trade optimism offers limited relief
Brokerage ICICI Securities also believes the outlook for Indian IT is not entirely negative. While IT exports are not directly affected by tariffs, improved India–US trade relations — with the US contributing over 60% of sector revenues — could support sentiment.
However, analysts cautioned that near-term growth will continue to depend on factors such as US tech spending, visa norms, and data regulations, rather than immediate policy changes.
Sentiment-driven sell-off, say market watchers
Pranay Aggarwal, Director and CEO of Stoxkart, said the sharp fall appears driven more by fear of disruption than by any immediate impact on order books or earnings visibility.
He added that while AI poses challenges, it also opens opportunities in higher-value services such as AI implementation, governance, and oversight — areas where Indian IT firms are already increasing investments.
Key takeaway for investors
Market experts advise investors to differentiate between volume-based IT service models and specialised firms that can effectively integrate AI into their offerings. While volatility may persist in the near term, the current correction is widely seen as a repricing of business models rather than a collapse of the Indian IT sector.
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