Indian IT Crashed…Infosys and TCS fell. What next?
- Gabriela Galeena
- 5 days ago
- 3 min read
For years, technology stocks seemed unstoppable. On February 4, 2026, that confidence cracked hard.
In just a few hours, the Nifty IT index dropped nearly 5.9%, TCS by 7.01%, and Infosys by 7.26%. While software stocks across global markets suffered double-digit losses over the week, wiping out hundreds of billions of dollars in market value. What began as a routine trading day quickly turned into a sharp reminder of how fast sentiment can change.
So what exactly went wrong?
The trigger: AI fear hits the market
The immediate spark came from Anthropic, which unveiled a new set of advanced AI tools designed to handle complex workplace tasks with very little human involvement. The message investors took away was unsettling: AI may no longer just support IT companies; it could start replacing parts of their core work.
That idea struck at the heart of the IT business model. If machines can write code, test software, manage workflows, and analyse data faster and cheaper, what happens to companies built around large teams and billable hours?
Markets didn’t wait for answers. They sold.
Why Indian IT stocks were hit so hard
Once software stocks started falling in the U.S. and Europe, Indian IT stocks followed almost immediately. India’s IT sector earns a large share of its revenue from overseas clients, so global tech sentiment often sets the tone back home. This time, the tone was nervous, and then outright fearful.
Heavyweights such as Infosys, TCS, and Wipro all saw sharp declines, pulling the entire index down with them.
Segment | What Happened on Feb 4 |
Nifty IT Index | -5.87% |
Infosys | -7.26% |
TCS | -7.01% |
Wipro | -3.85% |
S&P 500 Software | Fell ~11.21% over the week |
Global software sector | wiped off ~1 $ trillion |
The pressure was already building
The AI shock didn’t act alone. In the days before the sell-off, investors were already uneasy. Several global technology and semiconductor companies had issued cautious earnings outlooks, hinting that growth might slow. Valuations were high, expectations were stretched, and confidence was fragile.
When the AI news hit, it simply accelerated a correction that was already waiting to happen.
Money flows made it worse
Then came the final push. Foreign Institutional Investors (FIIs) stepped up selling to ₹2150.51 Cr, continuing a trend of reducing exposure to Indian equities the next day. While Domestic Institutional Investors (DIIs) did buy into the fall, their support wasn’t enough to absorb the scale of foreign outflows. The result was a fast and deep slide.
This wasn’t an India-specific event. It was a global re-pricing of technology stocks, driven by changing views on growth, risk, and disruption.
What this means for retail investors
For retail investors, the fall felt sudden and unsettling. But this kind of correction is driven more by fear and uncertainty than by businesses suddenly breaking down.
Most large IT companies still have strong balance sheets, global clients, and steady cash flows. What’s under pressure is confidence in future growth, not the existence of the sector itself.
This phase will likely separate companies that adapt from those that don’t. Firms that rely purely on adding more people to grow revenue may struggle. Those who use AI to cut costs, improve efficiency, or build new offerings could recover faster.
Volatility may continue for a while. Sharp falls are often followed by choppy markets as investors wait for clarity on earnings, client spending, and AI strategies. Acting in haste can be risky.
The bigger picture
This sell-off doesn’t signal the end of the IT sector. But it does mark the end of easy optimism.
The market is forcing companies and investors to confront a new reality. In the age of AI, growth cannot be assumed. It has to be demonstrated.
The next few quarters will decide who evolves and who gets left behind. For now, the message from the market is clear: certainty has become costly, and doubt is driving prices.
Disclaimer: This content is for educational purposes only; please conduct personal research and consult a qualified investment advisor before making any investment decisions.
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