India’s technology sector faced a major selloff on Thursday as the Nifty IT index dropped over 4 per cent to a four-month low. Top IT companies like TCS, Infosys, and Wipro lost more than 4 per cent of their value. The sector’s total market value fell by Rs 1.3 lakh crore due to fears about AI disruption and strong US jobs data that reduced hopes for interest rate cuts.TCS, India’s biggest IT company, saw its market value fall below Rs 10 lakh crore as its stock hit a yearly low of Rs 2,776. Other major IT firms like HCL Tech and Mphasis also fell 4-5 per cent. The total value of IT stocks in the Nifty IT index dropped to Rs 27.6 lakh crore.The panic selling started after US AI company Anthropic launched Claude Cowork. This AI tool can reportedly do legal work like contract reviews and compliance tasks – work that IT companies usually do. Jefferies called this the “SaaSpocalypse” as investors worried that AI might replace IT companies rather than help them.“Tech stocks, reeling under the Anthropic shock, are unlikely to recover soon,” said Dr VK Vijayakumar from Geojit Investments. Some experts think companies could lose up to 40% of their revenue as AI starts doing work that humans used to do.In a twist of things, US job numbers showed 130,000 new jobs and unemployment at 4.3 per cent. This means the Federal Reserve might not cut interest rates soon, which is bad news for tech stocks.The big question now is whether IT companies can survive AI competition. Thomas Shipp from LPL Financial said, “The fear with AI is that there’s more competition, more pricing pressure, and that their competitive moats have gotten shallower, meaning they could be easier to replace with AI.”Motilal Oswal warned that AI will make old software and testing less important. However, they suggest watching for AI partnerships in the next 3-6 months, which could lead to new AI service deals by mid-2026.AI is now threatening areas like legal services and customer support – work that IT companies thought was safe from automation. This has created serious concerns about the future of traditional IT services companies.(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)
