Mumbai, February 4: Shares of major Indian Information Technology (IT) firms experienced a significant downturn during early trade on Wednesday, following a sharp sell-off in global technology stocks. Market heavyweights including Infosys, Tata Consultancy Services (TCS), HCLTech, and Tech Mahindra saw their valuations erode as investor sentiment was dampened by developments in the United States.

By mid-morning, Infosys shares had tumbled by more than 7 per cent, while TCS, HCLTech, and Tech Mahindra each recorded losses of nearly 6 per cent. Wipro also saw its share price slide by 4 per cent. The Nifty IT index emerged as one of the worst performers of the session, reflecting a broader 'risk-off' mood among traders as the Nasdaq slipped overnight.

Anthropic AI Disruption Concerns

The primary catalyst for the sell-off appears to be growing anxiety regarding the impact of artificial intelligence on the traditional outsourcing model. Sentiment was hit following the unveiling of new AI tools by Anthropic, which are capable of automating complex tasks such as document reviews and data analysis. These functions represent a significant portion of the work currently outsourced to Indian service providers.

The negative sentiment was first visible in the United States, where American Depositary Receipts (ADRs) of Infosys and Wipro fell sharply. Since a substantial portion of revenue for Indian IT firms is derived from overseas clients, particularly in the US and Europe, any volatility in global tech markets typically results in immediate selling pressure back home.

Indian IT Stock Meltdown

Market analysts suggest that the sector was already facing challenges due to high valuations and a slowdown in discretionary spending by global clients. The sudden advancement in AI capabilities acted as a trigger for nervous investors to exit their positions, leading to a bloodbath in both large-cap and mid-tier IT stocks. Mid-tier firms witnessed declines ranging between 4 per cent and 7 per cent as stop-loss orders were triggered.

While the sector is expected to remain volatile in the short term, Indian IT firms are reportedly investing heavily in cloud computing and AI-driven services to adapt to the changing landscape. Investors are now seeking clarity on the pace of global tech spending and how effectively these companies can integrate AI into their enterprise workflows to maintain long-term growth momentum.

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(The above story first appeared on LatestLY on Feb 04, 2026 12:28 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).