Tech stocks sink as Anthropic AI triggers global selloff; Nifty IT skids 6%

The Nifty IT index plummeted 5.9 per cent, the steepest intraday fall since April 7, 2025, with the fall led by Persistent Systems, LTIMindtree, and Infosys

India’s information technology (IT) stocks slid sharply on Wednesday after losses in Wall Street software peers, as advances in artificial intelligence (AI) spooked investors and raised concerns over increased automation.

 

The Nifty IT index plummeted 5.87 per cent, the steepest intraday fall since March 23, 2020.

 

During the session, the market capitalisation of the Nifty IT index fell by ₹1.92 trillion.

 

Tata Consultancy Services (TCS) and Infosys ended lower by over 7 per cent each.

 

Wipro slipped 3.8 per cent, while Persistent Systems and LTIMindtree were lower by 4.6 per cent and 5.5 per cent, respectively.

 

Meanwhile, the benchmark Nifty50 index ended 0.19 per cent higher.

 

Concern on Wednesday stemmed after AI startup Anthropic released a productivity tool for in-house lawyers.

 

Investors worry that the development of such AI tools will hurt software companies and profitability across the industry.

 

The release of the automotive tool triggered a selloff on Wall Street, with the Nasdaq 100 index ending 1.55 per cent lower on Tuesday.

 

A Goldman Sachs Group Inc. basket of US software stocks sank 6 per cent, its biggest one-day decline since April’s tariff-fuelled selloff, Bloomberg reported.

 

Software selloff has broadened with few safe havens as AI rate-of-change is extrapolated in both logical and illogical ways, said JPMorgan in a recent report.

 

The main trend being observed is the evolution of Claude from a chatbot that answers text-based questions to an agent that executes labour across your Mac’s local files and browser, it said.

 

“In our view, generalist money flows responding to the rapid AI product rate-of-change dynamic are overwhelming the deeper-thinking fundamental software sector specialists who are slightly more grounded in the principles that create stickiness for enterprise software businesses,” JPMorgan said.

 

The recent fears around AI impacting Indian IT companies are largely unwarranted, according to G Chokkalingam, founder of Equinomics Research, who believes several positive factors are being ignored by investors.

 

Concerns about one company eating into the market share of Indian IT services firms are being overstated, Chokkalingam said.

 

He added, “The recent depreciation of the rupee is marginally positive for exporters, but markets are overlooking this benefit.”

 

Also, banking, financial services and insurance (BFSI) companies cannot simply replace core IT products with AI due to security concerns and regulatory risks, he said

 

He said that there is no logical reason for these companies to see such steep declines.

 

Markets are ignoring the fact that Indian IT services companies are themselves integrating AI into their offerings, he said.

 

Another overlooked factor is the easing of concerns around trade tensions with the US, according to Chokkalingam.

 

Nifty IT ended 1.4 per cent higher on Tuesday, gaining on the back of the trade deal.

 

With the recently-concluded trade deal with the US, analysts noted that while IT services and software exports are not directly tariff-linked, improved trade relations, which contribute over 60 per cent of revenues for the sector, signal stronger strategic alignment.

 

ICICI Securities noted that the impact of the India-US trade deal is sentimentally positive.

 

But key catalysts for IT services, such as visa norms, tech budgets and data regulations, would remain factors.

 

Given these factors, Chokkalingam suggests that while the sector may not be a major wealth creator due to modest dollar revenue growth, it can still offer opportunities from a defensive or short-term trading perspective.

 

Investors may consider selectively looking at quality, cheaply valued small- and mid-cap IT stocks, he said.