IT stocks came under intense pressure in early trade on Wednesday, with the Nifty IT index plunging more than 5 per cent, tracking a steep sell-off in global technology shares. Weak cues from the US markets weighed heavily on sentiment, where counterparts of Indian software majors fell sharply amid growing worries that rapid advances in artificial intelligence could intensify competition for traditional software companies.
Investor anxiety was sparked after new software updates linked to Anthropic-driven AI models suggested faster innovation cycles and the potential for greater disruption across enterprise software and services. The developments revived fears that AI-led automation and new platforms could squeeze margins for established IT services firms, prompting traders to cut exposure to the sector.
At 10.10 am, the Nifty IT index traded at 36,590.80 after falling nearly 6 per cent to 36,297.90 in early trade from the previous close of 38,611.75.
Heavy selling was visible across frontline counters. Persistent Systems, LTIMindtree, Coforge, InfosysTata Consultancy Services, Mphasis and HCL Technologies were among the worst hit stocks, dragging the broader technology index lower. Shares of these companies declined sharply in the opening sessions as institutional investors reacted to the negative global cues.
Heavyweight Infosys depreciated over 6 per cent to ₹1,551.20 against the previous close of ₹1,656. TCS also fell 6 percent to ₹3,031.20.
Market participants said the fall reflected both near-term nervousness over pricing power in IT services and concerns that clients in developed markets could reassess technology spending in an environment of rapidly evolving AI capabilities.
The sharp drop in US-listed tech stocks overnight further amplified risk-off sentiment at home, leading to a broad-based sell-off across IT names. The tech-heavy Nasdaq fell 1.4 per cent as software stocks extended losses. Anthropic’s launch of workplace productivity tools intensified worries, with the sector shedding approximately $300 billion in market value, Devarsh Vakil, Head of Prime Research, HDFC Securities, said.
For now, volatility is expected to remain elevated as markets digest the implications of new AI-driven products and their potential impact on traditional software and outsourcing models.
Published on February 4, 2026