IT stocks came under heavy selling pressure on Thursday, February 12, following a sharp sell-off in global technology stocks amid renewed concerns around disruptions caused by AI-led start-ups. Moreover, stronger-than-expected US jobs data also weakened hopes of a near-term rate cut by the US Federal Reserve, adding to the negative sentiment.
The sell-off dragged the Nifty IT index down as much as 4.6% to an intraday low of 33,471.55, making it the worst-performing sectoral index on the benchmarks for the day. IT stocks lost ₹1.3 lakh crore in valuation, bringing the market capitalisation of the pack to ₹27.6 lakh crore during the session.
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.
The weakness reflects growing investor anxiety that rapid advances in artificial intelligence could weigh on pricing power, deal wins and long-term earnings visibility for traditional software services companies.
“Tech stocks, reeling under the Anthropic shock, are unlikely to recover soon. Indian IT will continue to struggle. The switch from IT to other segments will help performing stocks in performing sectors,” advised Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
At the time of writing the report, Coforge was the top loser in the IT index, down 5.5%, followed by LTI Mindtreem which also shed over 5%. Meanwhile, Wipro, Tech Mahindra, Infosys, Persistent Systems, and TCS also lost over 4% each, whereas Mphasis, HCL Tech and L&T Tech lost between 2.5%-4%.
In intra-day deals, TCS hit a fresh 52-week low of ₹2,776, down 4.5%
Wall Street on Wednesday
US equities closed lower on Wednesday, with the Dow Jones Industrial Average breaking a three-session winning run as a stronger-than-expected January jobs report did little to improve investor sentiment.
The Dow slipped 66.74 points, or 0.13%, to settle at 50,121.40. The S&P 500 finished marginally lower, easing by less than one point to 6,941.47, while the Nasdaq Composite declined 0.16% to end the session at 23,066.47.
Technology shares faced fresh selling pressure. Shares of Microsoft slid 2.2%, making it the biggest drag on the S&P 500, while Alphabet fell 2.4%. The S&P 500 software index dropped 2.6%, even as broader equity markets ended largely flat.
Earlier last week, IT stocks had already come under sharp pressure amid growing concerns that advances in artificial intelligence could intensify competition, particularly after Anthropic launched a legal-focused AI tool, raising fears of disruption for established software companies.
Why are IT stocks falling today?
Indian IT stocks declined sharply today as a mix of macro pressures and sector-specific concerns resurfaced. Strong US jobs data reduced hopes of near-term rate cuts, while persistent worries around artificial intelligence-led disruption continue to weigh on the earnings outlook of traditional IT services companies.
Strong US jobs data: US job growth unexpectedly increased in January, and the unemployment rate fell to 4.3%. The US Bureau of Labour Statistics, in its shutdown-delayed report, said 130,000 jobs were added to nonfarm payrolls in January, well above forecasts for a rise of 70,000, while both November and December were revised down a touch. The unemployment rate slipped to 4.3% from 4.4% in December, below expectations of 4.4%.
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.
AI disruption concerns: One of the biggest overhangs for the IT sector is the growing fear that artificial intelligence could structurally disrupt legacy business models. The market is concerned about how AI reshapes enterprise spending patterns and intensifies competition from AI-native players. According to Kotak Institutional Equities, the application of AI to legacy technologies in the enterprise tech stack requires contextual awareness to integrate deterministic software with the probabilistic nature of newer technology, a process that involves significant heavy lifting.
“New addressable spends, which were not possible with traditional software, provide another avenue for growth in the medium term. Enterprise package software, including systems of record, has been there for a long time and now AI layers would need to be applied on top of it to extract desired outcomes,” the brokerage added.
Motilal Oswal echoed the concern, noting that “AI will render much of legacy software and testing redundant,” while drawing parallels with how hyperscalers disrupted infrastructure management services and how BPO was upended in 2015. However, the brokerage highlighted AI-native partnerships over the next 3–6 months as a key variable that could support a pickup in AI services deals by mid-2026.
Dollar firm, rate cuts delayed: The US dollar firmed up following the stronger-than-expected January jobs data, further denting expectations of near-term interest rate cuts. Investors are now awaiting inflation data due on Friday for clearer cues on the future path of US monetary policy. The Dollar Index is hovering close to the 97 mark, adding pressure on risk assets and rate-sensitive sectors such as IT.
IT sector: Technical outlook
The IT sector is witnessing short-term pressure, with the Nifty IT index breaking below key trendline support and slipping under the 36,000 mark, noted Drumil Vithlani, Technical Analyst at Bonanza.
“Heavy volumes on recent declines indicate rising selling interest. Key stocks such as Wipro and Tech Mahindra are trading below important support levels, reflecting weak momentum. The RSI across the sector is in oversold territory, suggesting the possibility of a technical bounce; however, the broader trend remains negative,” Vithlani added.
Going ahead, the expert suggested that any recovery towards resistance zones is likely to face selling pressure. In the near term, a cautious approach is advised, with a preference for a sell-on-rise strategy until the index regains strength above critical resistance levels.
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.