As ongoing worries about disruptions brought on by artificial intelligence continued to negatively impact market mood, Indian IT equities continued their sell-off for a fifth consecutive session on Tuesday, with the Nifty IT index down more than 5% by the afternoon. Anthropic’s assertions that its Claude Code tools can significantly lower the cost and complexity of updating legacy software systems sparked the new worries.
Today, the Nifty IT index was down 5.1 percent, making it the benchmark sector with the poorest performance.
Following recent Anthropic assertions about automating old software modernization, a key source of income for traditional IT services organizations, there has been heightened global worry about AI-driven automation, which has led to a decline in IT equities. Fears that AI might fundamentally change the industry’s business mix have grown as a result of this development.
After Anthropic introduced new AI tools to automate legal and code analysis chores earlier this month, investors became concerned that AI might increase competition and reduce profits for software and IT services firms. This sparked the sell-off in IT shares. The Nifty IT index has dropped more than 21.6 percent in a month and more than 9.4 percent in a week.
Jefferies downgraded many IT companies earlier this week, cautioning that artificial intelligence would cause the industry to move structurally toward implementation and consulting work while reducing managed services. Such a change would raise cyclicality and necessitate adjustments to operational and talent models, according to the brokerage, increasing execution risks.
In spite of management commentary suggesting a potential macro recovery in CY26, CLSA lowered target prices across the board, citing ongoing valuation de-rating and investor skepticism over medium- to long-term growth visibility. The company retained its selective preferences for stocks like Infosys, Tech Mahindra, Coforge, and Persistent Systems.
