Indian IT stocks plunge as AI advancements trigger global sector reevaluation

Indian information-technology stocks plunged on Wednesday, February 4, 2026, as a wave of selling that began in the United States swept through Asian markets, prompted by fresh advances in artificial intelligence that investors fear could materially alter software and outsourcing revenues. The Nifty IT index dropped more than 6% in early trade, wiping out much of the prior session’s gains linked to optimism over an India–US trade understanding.

Large-cap names bore the brunt of the rout. According to exchange data reported in the lead account, Infosys declined into the mid-1,500s rupees, while Tata Consultancy Services fell into the low-3,000s; mid-tier and specialist IT firms posted comparable losses. Traders identified the immediate catalyst as the unveiling of enhanced automation agents from US AI developer Anthropic, a development earlier highlighted by CNBC-TV18 and analysed in detail by Forbes, which said the new tools are capable of automating tasks across legal, sales, marketing and data workflows. Market participants described the reaction as a reassessment of whether AI will predominantly augment human work or substitute it, with some commentators using the term “SaaSpocalypse” to capture the concern.

The sell-off was not limited to India. Japanese software and cybersecurity firms registered steep declines, TIS plunged double digits and Trend Micro also fell sharply, while leading Chinese cloud and internet companies, including Kingdee, Tencent, Alibaba and Baidu, all moved lower. According to Forbes, global software names such as Oracle, Adobe and Salesforce also saw notable weakness after Anthropic’s announcement, underscoring how the perceived threat from advanced AI spurred a cross-border reappraisal of sector valuations.

The episode compounds existing headwinds for Indian IT. Market research and brokerage commentary over the past year have flagged a mixture of slowing growth and valuation pressures at major suppliers; Morgan Stanley’s downgrade of Infosys in March 2025 and reductions in target price were cited at the time as evidence of limited upside. Earlier earnings and guidance misses have also periodically dented sentiment, Investing.com recorded a nearly 6% fall for Infosys in April 2024 after quarterly revenue lagged estimates, and broader sector sensitivity to global consulting and outsourcing peers’ results has been noted, for example after Accenture’s second-quarter update in March 2025, which weighed on several Indian IT shares.

Technical signals had already tilted cautious for some stocks. Business Standard reported that Infosys slipped below its 200-day moving average in February 2025 for the first time since mid‑2024, a development interpreted by chart analysts as signalling a higher probability of continued downside in the near term. That dovetails with episodic sharp corrections seen after quarterly disappointments; press reports documented an outsized fall following a particularly weak earnings release that pushed Infosys to a 52‑week low.

Company statements issued so far have generally sought to maintain a forward-looking tone about opportunities from AI even as investors digest the near-term revenue implications. Analysts and investors will be watching client spending signals closely in the coming weeks to determine whether the latest technology leap represents accelerated productivity gains for incumbents or an inflection that compresses long-standing software and outsourcing revenue pools. In the short run, the market response on February 4 reinforces how swiftly technological advances can shift risk perceptions across a globally interconnected IT sector.