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AI Fears Trigger IT Stock Selloff, Drag Down Sensex and Nifty

Indian stock indices declined sharply, led by a massive selloff in IT stocks due to mounting investor concerns over AI-led disruptions to traditional business models. Analysts point to rapid advancements in AI tools automating key services and stronger US job data reducing hopes for Fed rate cuts as key dampeners. Heavyweights including Infosys and TCS exerted significant downward pressure on the benchmarks. The weak sectoral sentiment, coupled with global geopolitical tensions, is prompting a cautious investor approach in the near term.

Key Points: AI Disruption Fears Cause Heavy IT Selling, Market Falls

  • IT index plunges 5.51%
  • AI fears disrupt traditional outsourcing models
  • Strong US data dampens rate cut hopes
  • Heavyweights like Infosys, TCS lead decline
  • Geopolitical tensions add to cautious sentiment
2 min read

Heavy selling in IT weighs down Indian stock indices

Sensex and Nifty fall as AI concerns spark a major selloff in IT stocks. Analysts warn of structural shifts in the outsourcing model.

"AI is reshaping markets by compressing margins in service-intensive sectors - Vinod Nair, Geojit"

New Delhi, February 12

Indian stock indices dipped Thursday, weighed down by a nosedive in IT counters, with analysts attributing it to mounting concerns over AI-led disruptions.

Sensex closed at 83,674.92 points, down 558.72 points or 0.66 per cent, while Nifty closed at 25,807.20 points, down 146.65 points or 0.57 per cent.

Among the sectoral indices, IT declined the most, by 5.51 per cent, according to the data.

"A nosedive correction in the IT index triggered by mounting concerns over AI-led disruptions, along with low expectations of a US Fed rate cut due to strong US job data and unemployment rates, dampened investor sentiment. Globally, AI is reshaping markets by compressing margins in service-intensive sectors and increasing concentration-led volatility. In India, this technology shift is likely to structurally transform IT services by accelerating delivery timelines and automating volume-driven tasks, thereby challenging the traditional headcount-based outsourcing model," said Vinod Nair, Head of Research, Geojit Investments Limited.

Nair added that a weak sentiment in the IT sector, along with lingering geopolitical tensions between the US and Iran, may influence investors to take a cautious approach in the near term.

Heavyweights such as Infosys, TCS, Wipro, Tech Mahindra, and HCL Tech led the decline, exerting significant pressure on the benchmark indices.

"The selloff was triggered by intensifying concerns around AI-led disruption and the potential impact on traditional outsourcing revenue models. Rapid advancements in enterprise-grade AI tools capable of automating coding, analytics, legal drafting, and business workflows are prompting investors to reassess long-term growth assumptions for labor-intensive IT services. Additionally, stronger-than-expected US jobs data reduced expectations of near-term Federal Reserve rate cuts, raising concerns that discretionary IT spending from US clients may remain subdued," said Ponmudi R, CEO of Enrich Money, a SEBI - registered online trading and wealth tech firm.

Earlier this week, Indian stock indices rose, taking cues from the interim trade deal with the US.

So far in 2026, Sensex dropped about 2 per cent on a cumulative basis.

- ANI

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Reader Comments

P
Priya S
Very concerning for all the engineers and their families whose livelihoods depend on these companies. Hope the management has a solid plan to retrain employees. The human cost of this "structural transformation" can't be ignored. 🤞
V
Vikram M
Sensex down only 0.66%? That's just a minor correction in a bull market. Media makes it sound like a crash. Smart investors will see this as a buying opportunity in quality stocks. Market always overreacts in the short term.
R
Rohit P
The US Fed rate cut hopes fading is a bigger worry than AI, in my opinion. Our IT sector's health is directly tied to US client spending. If their economy stays strong but rates stay high, our exports suffer. It's a double-edged sword.
S
Sarah B
Respectfully, I think the article and some comments are too focused on the negatives. AI disruption also creates massive new opportunities for Indian firms that can build and manage these AI systems. The narrative should be about adaptation, not just decline.
K
Karthik V
Time to diversify the portfolio beyond IT heavyweights. Pharma, FMCG, and infrastructure stocks look more stable. You can't keep all your eggs in the IT basket, especially with such global volatility. Lesson learned for many retail investors today.

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