AI fears wipe out $50 billion from Indian IT stocks in February

SelfRugger · 2026-03-16T13:53:32+00:00

Fears regarding AI disruptions led to a significant decline in Indian IT shares, wiping out $50 billion in market capitalization as investors reacted to potential growth challenges. Despite the downturn, analysts emphasize the continued relevance of IT firms in the evolving landscape.

SelfRugger

2026-03-16 13:53:32

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AI fears wipe out $50 billion from Indian IT stocks in February

Vivek Kumar M and Nandan Mandayam

Fri, February 13, 2026 at 1:37 PM GMT+9 2 min read

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By Vivek Kumar M and Nandan Mandayam

Feb 13 (Reuters) - Indian IT shares logged their worst week in more than 10 months on Friday, ‌extending a rout driven by fears of disruption from artificial intelligence tools ‌that wiped about $50 billion off the sector’s market capitalisation so far in February.

The launch of a tool by tech startup Anthropic last month triggered a global tech sell-off and intensified concerns that rapid adoption of generative AI could upend India’s $283 billion IT services industry.

For the week, the Nifty IT slid 8.2%, its steepest drop since April 2025.

Analysts at ‌J.P. Morgan flagged investor concerns ⁠that India’s IT firms could miss growth targets as AI pushes clients to reallocate spending.

Sat Duhra, portfolio manager at Henderson Far ⁠East Income, said IT companies probably haven’t done the greatest job in terms of communicating how they can turn AI into an opportunity rather than a threat.

The index fell as much as 5.2% on Friday before paring losses to settle 1.44% lower.

The losses ‌on Friday were led by a 2.1% drop in industry leader Tata Consultancy Services. Infosys declined 1.2% and HCLTech dropped 1.4%.

Friday’s mid-session recovery was largely due to investors “buying the dip” on attractive valuations, Centrum Broking’s Piyush Pandey said.

“Investors have largely over-reacted to the threat posed by these AI tools. It is important to note ‌that IT companies remain relevant even in the age of AI, albeit with a leaner headcount.”

JP Morgan noted that it’s “overly simplistic” to assume that AI can automatically generate enterprise grade software ‌and replace the value IT Services firms create across the cycle.

“IT Services companies remain the plumbers in the tech world, and if enterprise software/SaaS is rewritten on a bespoke basis by agents - it will need significant services plumbing to ‌work in enterprise context and minimise AI slop.”

(Reporting by Nandan Mandayam, Vivek Kumar M and Bharath Rajeswaran in Bengaluru, writing by Chandini Monnappa; Editing by Sonia Cheema and Janane Venkatraman)

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