Indian IT stocks faced severe pressure from AI advancements, marking the sector’s worst week in four months amid revenue concerns.
Indian IT stocks AI jitters intensified on 6 February 2026, as shares of major firms declined about 2% in Mumbai trading. The NIFTY IT index fell 6.8% over the week, its steepest drop since September 2025. This slump affected all 10 index constituents, with Coforge down 3.8%, and TCS and Infosys each shedding nearly 2%. Analysts attribute the fall to rapid AI progress threatening traditional revenue streams in application services.
The downturn highlights broader vulnerabilities in India’s outsourcing-dependent IT industry, which employs millions and contributes significantly to South Asia’s economy. With Pakistan and Bangladesh also relying on similar services, any prolonged AI disruption could ripple across regional job markets and export earnings.
AI Impact Indian IT Sector
AI advancements are reshaping the landscape for Indian software exporters. High-margin services like application development and maintenance face risks from tools that automate coding and processes. A TCS global study released on 2 February 2026 identified critical gaps in AI adoption among retailers, noting challenges in integration that could mirror issues in IT services. This comes as companies grapple with transitioning to AI-driven models.
In a related development, Anthropic announced on 16 January 2026 the appointment of Irina Ghose as Managing Director for India, ahead of opening a Bengaluru office. This expansion signals growing AI presence in the region, potentially accelerating competition for local IT firms.
Industry experts point to AI’s potential to reduce demand for human-led services. For instance, Anthropic’s research published on 29 January 2026 showed that AI assistance in coding speeds up tasks but may hinder skill development among engineers. In the Indian IT sector, where over 5 million professionals work, such effects could lead to reskilling needs and workforce shifts.
NIFTY IT Decline Details
TCS, India’s largest IT exporter, saw its shares drop amid broader market sentiment. The company, which reported revenue of USD 29.1 billion in FY2025, has been investing in AI but faces questions on short-term returns. Infosys, another heavyweight, echoed similar pressures, with its stock following suit.
This NIFTY IT decline aligns with global trends where AI hype has led to volatility in tech valuations. In South Asia, where India’s IT sector drives 8% of GDP, the drop raises concerns for economic stability. Neighbouring countries like Pakistan, with emerging IT hubs in Lahore, could see indirect effects through supply chain linkages.
Background on AI Disruptions
India’s IT boom began in the 1990s, fuelled by low-cost talent and English proficiency. Firms like TCS and Infosys built empires on outsourcing from Western clients. However, AI tools from companies like Anthropic are now automating routine tasks, prompting fears of revenue erosion.
Anthropic’s Claude AI, known for its reliability in complex queries, has been integrated into various platforms. The firm’s India expansion aims to tap local talent, but it may also heighten competition. A post from Anthropic on 29 January 2026 discussed AI’s role in coding, revealing that users completed tasks faster but scored 17% lower on mastery quizzes. This data suggests potential long-term challenges for skill-based industries like Indian IT.
Official data from the Ministry of Electronics and Information Technology indicates India’s IT exports reached USD 194 billion in FY2025. Yet, with AI impact Indian IT sector growing, projections for FY2026 may need revision.
What’s Next for Indian IT Stocks
Stakeholders await quarterly earnings from major IT firms, due in April 2026, for clarity on AI strategies. Regulatory bodies like SEBI may introduce guidelines on AI disclosures to stabilise markets.
Infosys has emphasised AI governance in recent communications. A 4 February 2026 post highlighted data readiness and reskilling as key to enterprise AI adoption. Similarly, TCS’s investor interactions scheduled for February could address these jitters.
As Indian IT stocks AI jitters persist, the sector’s adaptation to AI will determine its resilience. Investors are watching for signs of recovery, with potential rebounds tied to global economic cues.
Published in SouthAsianDesk, February 6th, 2026
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