IT Stocks Meltdown 2026: AI Fears Wipe ₹1.9 Lakh Crore Off Nifty IT

A Perfect Storm Hits Dalal Street

Indian information technology stocks experienced a dramatic sell-off on Friday, February 13, 2026, extending a brutal rout to a third consecutive day. Industry giants like Infosys Ltd., Tata Consultancy Services Ltd. (TCS), and Wipro Ltd. led the decline, dragging the entire sector into a downturn not seen since the 2008 financial crisis. The Nifty IT index, a barometer for the top 10 IT firms, plunged 5.2% intraday, culminating in a staggering 10.5% loss over just two trading sessions. This sharp correction has wiped out approximately ₹1.9 lakh crore in market capitalization, sending shockwaves through the investor community and raising fundamental questions about the future of India's technology services industry.

The AI Disruption Trigger

The immediate catalyst for the sell-off was the growing anxiety surrounding artificial intelligence. The launch of advanced enterprise workplace solutions by the US-based AI startup Anthropic intensified fears that generative AI could structurally disrupt the traditional application development and maintenance (ADM) revenue streams that form the bedrock of Indian IT companies. The concern is that as AI tools become more proficient at writing code, fixing bugs, and deploying systems, the demand for large teams of engineers could diminish, fundamentally altering the industry's labour-heavy business model. This sentiment was amplified by a sharp fall in the US-listed American Depositary Receipts (ADRs) of Indian IT firms, with Infosys ADR dropping 10% and Wipro ADR falling 5% in the preceding session.

Global Headwinds and Fading Rate Cut Hopes

Compounding the AI-related fears were unfavorable global macroeconomic signals. Stronger-than-expected US jobs data for January dampened market optimism for near-term interest rate cuts by the US Federal Reserve. Since Indian IT companies derive a significant portion of their revenue from the US market, any delay in monetary easing is perceived negatively, as it could translate to lower discretionary tech spending by American clients. The weakness was mirrored on Wall Street, where the technology-heavy Nasdaq Composite index saw a significant decline, creating a risk-off sentiment that quickly spilled over into domestic markets.

Carnage Across the IT Pack

The damage was widespread across the sector. Infosys was among the hardest hit, with its stock dipping nearly 8% to a 52-week low of ₹1,281.50. Over two days, the stock plunged 13%. Other major players, including TCS, HCL Technologies, Coforge, Tech Mahindra, and Wipro, fell between 5% and 6%. Many of these stocks, along with others like Cyient and L&T Technology Services, also hit their respective 52-week lows. The Nifty IT index itself touched a 52-week low of 30,918.95 during the day's trade. The index has fallen 32% from its all-time high, marking its most significant decline since the Lehman crisis.

Erosion of Market Leadership

The sustained pressure on TCS's stock had a notable impact on its market standing. The IT behemoth's market capitalization slipped below the ₹10 lakh crore mark for the first time since December 2020. This decline led to TCS being overtaken by both State Bank of India and ICICI Bank, pushing it down to the sixth position among India's most valuable companies. This shift underscores the severity of the tech sell-off and the concurrent resilience in the banking sector.

Expert Commentary: Caution is Key

Market analysts have urged investors to exercise caution. Ajit Mishra of Religare Broking noted that while the AI narrative is causing significant damage, it may be too early to dismiss the sector's ability to adapt. He advised investors to limit their exposure and await clarity. Ruchit Jain from Motilal Oswal Financial Services pointed to technical indicators, stating that the Nifty IT index breaking its 200-day moving average signals a change in trend, and advised against trying to catch a falling knife. Dr. VK Vijayakumar of Geojit Investments described the situation as an "Anthropic shock," suggesting that investors should avoid panic selling and wait for the dust to settle before making decisions.

Industry Body Remains Optimistic

In contrast to the market's pessimism, industry body Nasscom has dismissed the concerns as "misplaced." It stated that fears of advanced AI tools bypassing the Indian IT engine are not justified, suggesting that the industry has a history of adapting to technological shifts. The real test, however, will be whether companies can successfully pivot their business models to leverage AI as a growth driver rather than succumbing to it as a structural threat.

Looking Ahead: A Volatile Path

The confluence of AI disruption fears, weak global cues, and negative sentiment from ADR markets has created a challenging environment for Indian IT stocks. While the long-term impact of AI is yet to be fully understood, near-term volatility is expected to persist. Investors will be closely watching for signs of stabilization in US tech stocks and clearer guidance from company management on how they plan to navigate the evolving technological landscape. Until then, the sector remains on uncertain ground.