IT rout extends to third straight day: Infosys, TCS, other IT stocks fall up to 6%; here's why

IT rout extends to third straight day: Infosys, TCS, other IT stocks fall up to 6%; here's why

• Indian IT index falls 5% on AI disruption fears
• Nifty IT index posts worst week since March 2020
• Infosys, TCS, HCLTech among biggest losers

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The IT index fell for its third straight session on February 13 by declining a whopping 5% on intensifying fears of AI-driven automation disrupting Indian IT's labour-intensive business model. The sectoral index declined 5.5% on February 12.

The tech-heavy Nasdaq Composite index fell more than 2% on Thursday ahead of US inflation data, due later on Friday, which could influence the future path of rates.

Stronger-than-expected US jobs data in January has dented expectations of a near-term rate cut.

"The sharp correction in the IT pack has temporarily put bulls on the backfoot," said Ajit Mishra, senior vice president of research at Religare Broking.

"Sentiment has weakened as traders react to heavy selling in IT stocks amid global volatility," Mishra said.

The sectoral index is down 17% so far in 2026.

10-member Nifty IT index declined 4.75% on February 13, extending weekly losses to 10.8%. The IT index is set for worst week since March 2020.

Indian IT sell-off started on February 4 after Anthropic announced a new AI tool.

Heavyweights Tata Consultancy Services, Infosys and HCLTech were biggest drags on Friday, down 4.88%, 6.28%, and 4.66%, respectively.

Asian shares retreated from record highs on Friday as worries about shrinking margins in the tech sector hit the likes of Apple.

On Thursday, hopes of a rate cut in the US faded after job growth unexpectedly accelerated in January and unemployment rate fell, leaving the Federal Reserve room to keep interest rates unchanged for some time. That weighed on the IT firms' shares, which count the world's largest economy as one of their biggest markets.

Rate cuts are seen as a key lever for lifting demand for IT spending that has largely been muted.

Anthropic also launched an upgraded version of its Claude artificial intelligence model that can work on tasks for longer and more reliably, while showing gains related to coding and finance. That compounded fears that software companies are increasingly vulnerable to disruption as tools such as Claude automate routine tasks.

"Markets have fallen into a turbulent phase which will cause some panic among investors even while offering opportunities. The sell off in AI stocks in US markets was expected but the timing and extent of the sell-off was not known. The 2.04% decline in Nasdaq is not a crash. But if the downtrend continues it might pull the US market down. For the Indian market, this correction in AI stocks is a positive, because last year’s global rally was primarily an AI trade in which India, an AI laggard, couldn’t participate. So the unwinding of the AI trade, If it persists, is a positive from the Indian perspective. However, what is rattling the Indian market now is the massive sell-off in IT stocks, which is the second largest profit pool of India Inc. The real impact of the ‘Anthropic shock’ on the IT sector is yet to be ascertained. Panic selling in IT stocks at this stage may not be a good idea. Investors may wait and watch for the dust to settle," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.