Indian IT stocks witnessed a massive sell-off for the third straight session on Friday, February 13, following a rout in global technology stocks in the US market. The fall was triggered by lingering concerns over artificial intelligence (AI)-led disruption in the sector. IT was further intensified by stronger-than-expected US employment data, which sharply reduced expectations of an early interest rate cut by the US Federal Reserve.
The sharp correction was not limited to IT alone, with broader benchmarks also facing pressure. While the Nifty IT index plunged over 5%, both the Nifty 50 and the Sensex declined more than 1%, reflecting a broader risk-off sentiment across markets. In 3 sessions, the IT index has cracked 12%.
Amid the turbulence, veteran investor Vijay Kedia weighed in on the sector’s future. In a post on X, he said that Indian IT had historically created immense wealth for investors but raised a critical question on whether the coming decade would be defined by reinvention or repetition.
In his tweet, Kedia advised investors to stay invested in sunrise industries at any cost, while avoiding sunset industries altogether, highlighting the importance of long-term structural relevance.
“Stay in a sunrise industry at any cost.
Stay out of a sunset industry at any cost.
Indian IT has created immense wealth.
The real question now –
is the next decade about reinvention… or repetition?,” his post said.
Offering a more measured perspective, market veteran, Samir Arora, struck a cautiously optimistic tone.
He said, “Disruption does not mean extinction.” In a separate post, Arora added, “Fear of disruption can mean lower valuations, lower growth expectations, lower terminal growth assumptions- all leading to underperforming stock prices. Rest we will all see together,” signalling that excessive pessimism around AI disruption could already be reflected in stock prices.
Bloodbath in IT stocks
The Nifty IT index crashed over 5% to an intraday low of 31,422.60, marking its lowest level since October 2023. From its recent peak, the index has shed about 12% in just three trading sessions, considering Friday’s low. All constituents of the index were firmly in the red.
Infosys emerged as the worst performer, with its share price tumbling 7.5%. TCS followed closely, sliding 6%. HCL Technologies declined 5.5%, while Wipro and Tech Mahindra lost nearly 4.5% each, underscoring the broad-based nature of the sell-off.
Global cues added to the pressure. In overnight trade on Thursday, the tech-heavy Nasdaq Composite index fell more than 2%, as investors reassessed the long-term implications of AI-led disruption on software and services companies.
The pressure on the sector has been building over time. After slipping about 13% in calendar year 2025, the Nifty IT index has already fallen roughly 11% so far in 2026. The index is down around 9% over the past three months and close to 12% in a month, underscoring the sustained sell-off in the sector.
Why IT stocks are under pressure
Technology stocks have been facing sustained selling pressure amid growing concerns over whether massive investments in artificial intelligence will translate into commensurate returns. The market is concerned about how AI reshapes enterprise spending patterns and intensifies competition from AI-native players.
Vinod Nair, Head of Research at Geojit Investments Limited, said, “AI is creating a structural shift in Indian IT services by reducing timelines and automating tasks, putting pressure on the traditional headcount-based outsourcing model.” He added that routine-heavy roles are likely to see layoffs, as fewer employees will be required to deliver similar outcomes, and noted that clients are increasingly shifting towards outcome-based pricing models.
Recent commentary from Palantir Technologies has further unsettled sentiment. The US-based firm highlighted that its AI platform is disrupting traditional seat-based software models and replacing third-party tools. It also said its AI offerings are powering complex SAP migration work, compressing implementation timelines from years to weeks.
Adding to concerns, Anthropic’s entry into automating low-level legal services and muted guidance from Gartner have raised fresh questions about future IT demand.
Reflecting the scale of the potential impact, Motilal Oswal Financial Services said in a report last week, “Before Palantir’s comments on ERP, we estimated 30-40% of IT services revenues at risk from AI deflation… we believe 9-12% of IT services revenue stands to be eliminated over 3-4 years,” implying a potential annual drag of around 2% on revenue growth.
Adding to the weak sentiment, US job growth unexpectedly increased in January, and the unemployment rate fell to 4.3%. These signals of labour market stability could give the Federal Reserve room to keep interest rates unchanged for longer as policymakers continue to monitor inflation.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.