Mumbai, February 24, 2026 — The Nifty IT index plunged over 3.3% in early trading Tuesday, extending its five-day losing streak as fears of artificial intelligence-driven disruption gripped investor sentiment. The decline was triggered by fresh concerns following claims by AI firm Anthropic that its Claude Code tools can significantly reduce costs and complexity involved in modernizing legacy software systems.
Top Nifty 50 losers included HCL Technologies, which fell over 3.9% to Rs 1,370, and Infosys, which declined 3.5% to Rs 1,281.5. Tata Consultancy Services dropped 3.1% to Rs 2,592.5, while Tech Mahindra declined 2.8% to Rs 1,400. Wipro was down 2.7% at Rs 200.2, and outside the Nifty 50, LTIMindtree traded lower by 2.4% to Rs 4,716.
The sell-off reflects mounting global anxiety over AI-powered automation, especially after Anthropic’s recent claims of automating legacy software modernization—a key revenue stream for many traditional IT services firms. The development has intensified fears that AI may fundamentally alter the industry’s business model, leading to increased competition and revenue pressures.
Earlier this month, the decline in IT stocks deepened after Anthropic announced new AI tools aimed at automating legal and code analysis tasks, prompting concerns that AI could further intensify industry competition. The Nifty IT index has lost over 8% in the past week and more than 20% over the past month.
Jefferies downgraded several IT stocks earlier this week, warning that AI could shift the sector toward consulting and implementation services, potentially reducing managed services and increasing cyclicality. The brokerage lowered Infosys and HCL Technologies to ‘hold’ with target prices cut by 31% and 26%, respectively, to Rs 1,290 and Rs 1,390. It also assigned underperform ratings to Tata Consultancy Services, LTIMindtree, and Hexaware Technologies, with target prices slashed by 28-33%.
Despite these declines, CLSA offered a more cautious perspective, suggesting that fears of AI disrupting Indian IT services are overdone. According to the brokerage’s channel checks, client spending, deal structures, and service mixes show no material change, with AI largely viewed as an incremental productivity tool rather than a replacement for traditional services.
CLSA maintained selective buy ratings on stocks such as Infosys, Tech Mahindra, Coforge, and Persistent Systems but lowered target prices due to valuation de-rating and lingering investor skepticism over medium- to long-term growth prospects, despite management hinting at a possible macro recovery in calendar year 2026.
