For those holding Indian IT stocks, 3 to 13 February has been brutal. It has been an uncompromising beating of almost every IT services stock, including INFY (Infosys Limited) and WIPRO (Wipro Limited).
The NIFTY IT Index (CNXIT) has fallen 21.94% (from the high/open of 3 Feb 2026 to 13 Feb 2026), by far one of the most brutal bear runs. Why did this happen? Are there any identifiable triggers, and is this the first sign of AI's impact on the IT world?
Here is how brutal the fall has been. We are taking the open/highs of 3 Feb 2026 to today's opening (all percentage drops from the open/high of 3 Feb 2026 to the open/low of 13 Feb 2026).
The IT giants tell the same story: INFY (Infosys Limited), WIPRO (Wipro Limited), TCS (Tata Consultancy Services Limited) and PERSISTENT (Persistent Systems Limited).
- TCS: down 22% (13 Feb 2026 open)
- Infosys: down 25.25% (13 Feb 2026 open)
- Persistent Systems: down 20% (13 Feb 2026 open)
- Wipro: down 18.73% (13 Feb 2026 open)
- Tech Mahindra: down 19.7% (13 Feb 2026 open)
- LTIMindtree, Coforge, Mphasis, OFSS: all recorded single-digit to mid-teens percentage declines across the same window (drop sizes vary by company and weighting)
However, on further observation, we see that US IT stocks have also bled (data available up to the 12 Feb 2026 close only):
- Palantir: down over 21% from 3 to 12 Feb 2026 (close), and over 33% since late December
- Salesforce (CRM): down over 10% from 3 to 12 Feb 2026 (close), and over 30% since the January highs
- ServiceNow: down over 19% from 3 to 12 Feb 2026 (close), and over 38% since mid-December
- Adobe: down over 17% in the same period
What changed on 3 February 2026?
The official "AI has arrived" moment had come. Anthropic, an as yet unlisted AI player (with investments from Amazon and Google), rolled out enterprise automation capabilities inside its Claude platform, widely referred to in the media as Claude Cowork.
In simpler terms, Anthropic expanded Claude with "coworker" or agent-style features that can:
- Autonomously review contracts
- Handle document workflows
- Assist compliance checks
- Summarise large datasets
- Automate internal enterprise tasks
How this changed the tech thought process, and why it led to a loss of confidence in tech stocks
We need to go back to the basics to understand this. IT services have always been highly valued because they represented future certainty. Add to this the fact that markets give outsized rewards to sectors and companies that show future promise, and trust in the success of IT services companies has been relatively high. These players were at the tip of innovation adoption.
Most of them operated on the number of "seats", or engineers, it took to complete the tasks.
Now this all changed. It was not theory any more: this rollout in Claude meant that investors realised AI can now automate real business tasks, such as contracts, documents, workflows, compliance and reporting.
These are the same activities IT services firms and enterprise software companies charge for. Investors could conclude that this directly threatens the present financial models on which traditional IT services companies are based.
The key shift: AI moved from productivity tool to labour replacement. Markets priced this as a future revenue risk.
This was not an entirely new concept. In theory, most of the market knew this day would come. But now it had been demonstrated, and the result was that funds reduced exposure immediately, triggering the sell-off in NIFTY IT and US software stocks.
This is what we have all been witnessing: the "Anthropic Shock".
The question now: is the worst behind us?
If we take into consideration the technicals in the markets, including our indices, especially the RSI and what it indicates, and if we read it right, the answer is no. From a fundamentals point of view, P/Es for IT services are bound to be affected.
The IT firms hit by the sell-off have not done anything they were not supposed to do. This looks more like a disruptive trigger that has changed the environment in which business happens, and most of the "smart money" already knew this day was going to come.
Once they saw the theory being demonstrated, and at scale, we must see this as smart money moving out of the present business and financial model on which IT sits.
To conclude, my view is that we have not seen the bottom of the IT sell-off yet.
Statutory disclosure and disclaimer
Registration details: I am a SEBI Registered Research Analyst holding Registration No. INH000012768.
Investment risks: Investment in the securities market is subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
Nature of content: The information provided in this article, titled "AI Has Arrived - And Your IT Stocks Are Feeling It", is for educational and informational purposes only. It does not constitute personal recommendations or take into account the particular investment objectives, financial situations or needs of individual clients.
Holding: I, my associates and my relatives do not have a financial interest in the companies mentioned (for example TCS, Infosys, Wipro).
Conflict of interest: I, my associates and my relatives do not have any actual or material conflict of interest at the time of publication of this article.
Remuneration: I have not received any compensation from the subject companies in the past 12 months.
Independent evaluation: The views expressed are based on internal research and publicly available information. Readers are advised to consult their certified financial advisor before making any investment decisions.
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