How Anthropic's new AI model will affect Indian IT stocks
What's the story
The Indian IT sector is facing a downturn, with Nifty IT index falling by 17% in 2026. This decline is due to fears of disruption from rapid advancements in AI. Major players like Infosys, Tata Consultancy Services (TCS), LTIMindtree, Coforge, Wipro, and L&T Technology Services have all witnessed over a 20% drop on a year-to-date basis. Now, they are preparing for another possible disruption with Anthropic's preview of its new model, Mythos.
Market reaction
Mythos model poses near- to medium-term disruption risks
The Mythos model is said to offer a huge leap in agentic software development capabilities. It has raised the near- to medium-term disruption risks for IT services according to Kotak Institutional Equities.
Industry forecast
Shift from conservative assumption to realistic baseline
Kotak Equities noted that the Mythos model shows a "step-change" in benchmark performance across software engineering tasks, which could pose risks to demand as well as valuations across the sector. If these performance enhancements are effectively translated into real-world applications, Kotak Equities warned that its tipped 3%-3.5% annual growth headwind for the IT services industry over next three years, could shift from a conservative assumption to a more realistic baseline.
Valuation pressure
Mythos could widen productivity gap across IT service segments
The Mythos model could intensify AI disruption-related concerns and put pressure on the valuation multiples of IT services firms. Kotak Institutional Equities expects Mythos to increase efficiencies across all IT services segments. However, stronger agentic software engineering capabilities could widen the productivity gap between application services and other IT service segments, according to the brokerage firm.
Sector resilience
IT sector's resilience during past disruptions
Analysts note that skepticism toward the Indian IT sector is not new. A similar phase was witnessed in 2016-2017 when clients moved from traditional outsourcing to digital and cloud. Despite fears of disruption, Indian IT companies adopted these technologies, tweaked delivery models, and returned to steady growth. DSP Mutual Fund believes further fall in prices of IT shares could make this sector attractive on an absolute basis.