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 Wall Street's software peers tumbled, following the latest rollout of an artificial intelligence (AI) platform.

 

The Nifty IT index plummeted 5.9 per cent, the steepest intraday fall since April 7, 2025, with the fall led by Persistent Systems Ltd (down 7.5 per cent), LTIMindtree (down 7.6 per cent), and Infosys (down 6.2 per cent). Tata Consultancy Services and Wipro were down 6 per cent and 6.7 per cent, respectively. 

 

At 9:50 AM, Wipro share price was down 3.7 per cent. LTIMindtree, Infosys and Persistent were down over 6 per cent each. Coforge and TCS were down 5 per cent each.

 

 

Meanwhile, the benchmark Nifty50 index was up 0.18 per cent, as of 9:50 AM, a day after it notched the best day in over eight months on the US-India trade deal. On this tariff news, the IT index registered a gain of 1.4 per cent on Tuesday.  CATCH STOCK MARKET UPDATES TODAY LIVE 

However, the 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 hurt profitability across the industry. 

 

The release of the automative tool triggered a selloff on Wall Street, with the Nasdaq index ending 1.43 per cent lower on Tuesday. A Goldman Sachs Group Inc. basket of US software stocks sank 6 per cent on Tuesday, its biggest one-day decline since April’s tariff-fueled selloff, Bloomberg reported. Asian peers also tracked losses, with legal software and data services firms falling.

 

However, not all is bad for the domestic technology pack, as the recently concluded trade deal with the US offers some positive benefits. While IT services and software exports are not directly tariff-linked, improved trade relations with the US, which contributes over 60 per cent of revenues for the sector signals stronger strategic alignment and easing geopolitical overhang, ICICI Securities said in a note.  ALSO READ | Axiscades Tech hits 5% upper circuit on bagging new orders from US firms 

The brokerage firm believes the impact of the India-US trade deal is sentimentally positive, while key catalysts for IT services would remain factors such as visa norms, tech budgets, and data regulations. Improved policy optics could encourage US enterprises to advance discretionary tech spending and GCC expansion, even though immediate revenue or margin acceleration for IT firms is unlikely, it added. 

 

There was also optimism for the stocks after the announcement of the 2026 Union Budget. Intending to boost investment in data centres, the budget proposed a tax holiday till 2047 for foreign companies that provide cloud services globally using data centres in India. 

Should you sell?

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. "The recent depreciation of the rupee is marginally positive for exporters, but markets are overlooking this benefit."

 

Also, BFSI companies cannot simply replace core IT products with AI due to security concerns and regulatory risks, he said, adding 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. 

 

Given these factors, Chokkalingam suggests that while the sector may not be a major wealth creator due to modest dollar revenue growth of around two to four per cent, it can still offer opportunities from a defensive or short-term trading perspective. In addition, investors may consider selectively looking at quality, cheaply valued small- and mid-cap IT stocks, he said.  ========== 

(Disclaimer: The views and investment tips expressed by the analysts in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)