IT Stocks Meltdown: Nifty IT falls 2,266 points, eroding Rs 1.92 lakh crore mcap as TCS, Infosys and others fall

Indian IT stocks saw steep declines on Wednesday following developments around the US-based AI company Anthropic. The combined market capitalisation of major IT stocks of the Nifty IT Index fell by Rs 1,92,432 crore on Wednesday, with TCS, Infosys, and HCL Technologies leading the losses.

Nifty IT fell sharply on Wednesday, closing at 36,345.65, down 2,266.10 points or 5.87 per cent. The index opened at 37,165.35, touched an intraday high of 37,176.70 and a low of 35,809.50. The total traded volume stood at 8,45,99,812 shares, with a turnover of Rs 12,554.72 crore.

Nifty IT remains below its 52-week high of 43,133.35 and above the 52-week low of 30,918.95. The sector saw heavy selling pressure, erasing recent gains

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What Led IT Stocks' Meltdown?

Market expert Ajay Bagga, in a conversation with Zee Business Managing Editor Anil Singhvi, explained that Anthropic has created advanced AI tools capable of writing software code. "The scale at which these tools can work is unprecedented," he said. "They can analyse huge amounts of data and provide outputs in minutes, which could affect traditional IT business models."

He added that while the AI tools may improve productivity, their adoption poses risks. "If you are a bank, retailer, or a large company, you cannot rely entirely on AI software whose accountability is not clear," Bagga said. "Companies like Infosys, TCS, or Oracle remain the industry standard because they provide products with clear responsibility and support."

IT Companies’ Resilience

Bagga said he consulted several senior industry figures, including promoters of Infosys and other US-based experts. He noted that although some AI tools are attracting attention, IT companies are unlikely to lose their core business immediately. "There will be disruption, but applications will still be developed and serviced by established IT companies," he said.

Discussing Anthropic’s valuation, Bagga said the company is estimated at 29 billion dollars, while other AI companies like OpenAI are valued at over 500 billion dollars. "The technology is moving fast, and several AI IPOs are expected in the near future," he said.

Limitations of AI Tools

He also highlighted some limitations of AI tools. "When I tested them, I found they sometimes provide outdated or incorrect data," Bagga said. "They are not fully reliable yet for critical business decisions."

Bagga stressed that while AI tools like Anthropic’s and others, such as Cursor or Gemini, can code efficiently, companies are cautious about deploying them for core operations. "Even if these AI tools are fast, their mistakes can have serious consequences," he said.

Global AI Landscape

On the global AI landscape, Bagga said China has also launched numerous AI companies, and Elon Musk merged his AI venture with SpaceX’s technology division, creating a paper valuation of 1.25 trillion dollars. "The competition is intense, and the speed of innovation is very high," he said.

Bagga further warned of the long-term implications of AI. "Experts are talking about the possibility of AI reaching human brain-level processing within a few years," he said. "While scenarios like machines taking control of critical systems are hypothetical now, the pace of AI development is remarkable."

He added that experiments have shown AI can act autonomously, making decisions to protect itself or optimise operations. "These are controlled experiments, but they highlight the challenges of managing advanced AI systems," Bagga said.

Bagga concluded by saying that while the hype around AI is significant, companies and investors should carefully assess both opportunities and risks. "Disruption will happen, but IT companies still have the experience and accountability that AI startups cannot replace immediately," he said.

IT Stocks Drag Indices

Benchmark indices ended slightly higher on Wednesday, with gains in ICICI Bank, Reliance Industries and Eternal offset by a sharp fall in IT shares.

The 30-share BSE Sensex rose 78.56 points, or 0.09 per cent, to close at 83,817.69 after moving between 83,119.95 and 83,947.53. On the BSE, 2,726 stocks advanced, 1,477 declined, and 163 remained unchanged.

The 50-share NSE Nifty gained 48.45 points, or 0.19 per cent, to settle at 25,776. Infosys, TCS, HCL Tech and Tech Mahindra were the biggest losers, falling up to 7 per cent. IT shares fell sharply due to weakness in global technology stocks and concerns over overvaluation, traders said. Among sectoral indices, IT dropped 5.49 per cent, while the BSE Focused IT fell 5.06 per cent.