AI fears batter IT stocks, Nifty IT down 21% monthly
What's the story
The Nifty IT index has plunged over 5% today, marking the fifth consecutive session of decline. The fall is mainly due to growing concerns about artificial intelligence (AI)-driven disruption. The fears were fueled by Anthropic's recent claims that its Claude Code tools can significantly reduce the cost and complexity of modernizing legacy software systems.
Stock performance
All Nifty stocks trading in red
The Nifty IT index, the worst-performing sector on the benchmarks, was down 5.1% at around 1:00pm today. Among the top losers were Tech Mahindra and HCL Technologies whose shares fell by 6.7% and 6.5%, respectively. Infosys's stock declined by 4.6%, Tata Consultancy Services slipped by 4%, while Wipro was down by a further 3%. LTIMindtree also witnessed a sharp decline outside of Nifty 50, with its shares falling by 6.3% to ₹4,526.7 apiece today afternoon session.
AI impact
Nifty IT index down nearly 22% in a month
The decline in Indian IT stocks comes as Anthropic's new AI tools are aimed at automating legal and code analysis tasks. This has raised investor concerns about intensified competition and shrinking revenues for software and IT services companies. The Nifty IT index has lost over 9.4% in a week, and more than 21.6% in a month due to these developments.
Market reaction
Jefferies downgrades IT stocks, trims target prices
Earlier this week, Jefferies downgraded several IT stocks, warning that artificial intelligence may structurally shift the sector toward consulting and implementation work while shrinking managed services. The brokerage downgraded Infosys and HCL Technologies to 'hold' with their target prices cut by 31% and 26%, respectively. It also downgraded Tata Consultancy Services, LTIMindtree, and Hexaware Technologies to 'underperform,' trimming target prices across the sector by 28-33%.
Stock preferences
CLSA maintains selective preferences for IT stocks
CLSA took a more measured stance on the sector, saying fears of AI-led disruption in Indian IT services appear overdone. The brokerage maintained selective preferences for stocks such as Infosys, Tech Mahindra, Coforge and Persistent Systems but cut target prices across the board. This was due to continued valuation de-rating and investor skepticism over medium- to long-term growth visibility despite management commentary pointing toward a possible macro recovery in CY26.