Nifty IT index crashes over 5% as Anthropic’s AI claims fuel disruption fears; TCS, Infosys among top losers

IT shares crash today

• Nifty IT index falls over 5 percent amid AI disruption fears
• Tech Mahindra, HCL Tech, Infosys among top losers
• Brokerages downgrade IT stocks, citing AI-driven risks

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Indian IT stocks extended their sell-off for a fifth straight session on Tuesday, with the Nifty IT index plunging over 5 percent by afternoon, as persistent concerns over artificial intelligence-led disruption continued to weigh heavily on investor sentiment. The fresh fears followed claims by Anthropic that its Claude Code tools can sharply reduce the cost and complexity of modernising legacy software systems.

The Nifty IT index was down 5.1 percent around 12:50 pm, making it the worst-performing sector on the benchmarks.

Among the top losers on the Nifty 50, Tech Mahindra shares fell 6.7 percent to Rs 1,344.7, while HCL Technologies dropped 6.5 percent to Rs 1,333.7. Infosys stock declined 4.6 percent to Rs 1,266, Tata Consultancy Services slipped 4 percent to Rs 2,569.9, and Wipro was down 3 percent at Rs 199.8. Outside the Nifty 50, LTIMindtree also traded sharply lower, falling 6.3 percent to Rs 4,526.7.

The weakness in IT stocks follows heightened global anxiety around AI-driven automation after recent claims by Anthropic on automating legacy software modernisation, a core revenue area for traditional IT services firms. The development has intensified fears that AI could structurally alter the industry’s business mix.

• Also read | CLSA's top IT stock picks: Brokerage says AI fears overdone, but cuts target prices amid valuation de-rating

The sell-off in IT shares had begun earlier this month after Anthropic launched new AI tools aimed at automating legal and code analysis tasks, raising investor concerns that AI could intensify competition and compress revenues for software and IT services companies. The Nifty IT index has lost over 9.4 percent in one week, and more than 21.6 percent in one month.

Earlier this week, Jefferies downgraded several IT stocks, warning that artificial intelligence may structurally shift the sector towards consulting and implementation work while shrinking managed services. The brokerage said such a shift would increase cyclicality and require changes in operating and talent models, adding to execution risks.

Jefferies downgraded Infosys and HCL Technologies to ‘hold’ and cut their target prices by 31 percent and 26 percent to Rs 1,290 and Rs 1,390, respectively. It also downgraded Tata Consultancy Services, LTIMindtree and Hexaware Technologies to ‘underperform’, while trimming target prices across the sector by 28-33 percent. The brokerage noted that despite year-to-date declines of up to 16 percent, several IT stocks still offered higher downside potential than upside.

In contrast, CLSA struck a more measured tone on the sector in a note released on Tuesday, saying fears of AI-led disruption in Indian IT services appear overdone. The brokerage said its channel checks showed no material change in client spending behaviour, deal structures or service mix, with AI still being absorbed largely as an incremental productivity and efficiency lever rather than a wholesale replacement for traditional services.

CLSA maintained selective preferences for stocks such as Infosys, Tech Mahindra, Coforge and Persistent Systems, but cut target prices across the board, citing continued valuation de-rating and investor scepticism over medium- to long-term growth visibility, despite management commentary pointing to a possible macro recovery in CY26.

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