The Indian equity markets witnessed a sharp divergence in sectoral performance on Wednesday, February 4, 2026. While the broader indices remained relatively stable, the NIFTY IT index faced a massive rout, tumbling over 5% during intraday trade. This aggressive selloff was triggered by the latest product launch from AI startup Anthropic. The new tools, designed to automate complex professional tasks, have raised existential questions about the traditional billable-hour business models of India’s top software exporters.
The Anthropic Catalyst: Why Tech Stocks are Bleeding
The primary driver behind the sudden bearish sentiment in the technology sector is the release of Anthropic’s “Claude Cowork” agent. Unlike previous generative AI models that primarily assisted with text generation, these new plug-ins and extensions are designed for deep-tier automation. They can execute end-to-end workflows in legal research, compliance auditing, sales operations, and data analytics.
Market analysts suggest that these functions represent the “bread and butter” of many Indian IT service providers. Traditionally, global corporations outsourced these labor-intensive processes to firms like Infosys and TCS. With Anthropic providing an autonomous agent capable of handling these tasks at a fraction of the cost, investors fear a significant dent in long-term contract renewals and high-margin revenue streams.
Deep Dive into NIFTY IT Index Performance
The carnage in the tech sector was widespread, leaving no major player unscathed. The NIFTY IT index emerged as the worst-performing sectoral gauge, with all ten constituents trading deep in the red. Mid-cap IT firms, often perceived as more vulnerable to niche disruptions, bore the brunt of the selling pressure.
- Persistent Systems: Led the losers with a decline of over 6.5%.
- LTI Mindtree & Coforge: Both stocks slumped between 6% and 6.4%.
- Tier-1 Giants: Industry leaders Infosys, HCL Technologies, and Tata Consultancy Services (TCS) saw their valuations erode by 5% to 5.8%.
The swiftness of the decline reflects a growing “AI anxiety” among institutional investors who are re-evaluating the valuation multiples of legacy software companies in an era of autonomous agents.
Sensex and NIFTY50: A Tale of Two Halves
Despite the bloodbath in the IT corridor, the headline indices managed to stay afloat. The SENSEX and NIFTY50 traded on a subdued yet resilient note, thanks to a rotation of capital into “Old Economy” sectors. Heavyweight buying in banking and energy acted as a crucial cushion for the benchmarks.
Reliance Industries and major private lenders like ICICI Bank and HDFC Bank saw significant inflows. Investors seemingly moved their capital away from the volatile tech space into sectors with tangible assets and domestic consumption tailwinds. The SENSEX oscillated within a 656-point range, reflecting the tug-of-war between the crashing IT stocks and the surging banking majors.
Global Tech Selloff Echoes in Asia
The weakness in Indian tech was not an isolated event. It mirrored a broader global trend where technology-heavy indices in the United States faced similar downward pressure overnight. The sentiment spilled over into Asian markets on Wednesday morning.
While Japan’s Nikkei fell 0.67% and Hong Kong’s Hang Seng declined 0.45%, some markets like South Korea’s KOSPI managed to gain 0.74%. The mixed global cues suggest that while AI is viewed as a productivity booster for the economy at large, it is currently being treated as a “disruptor-in-chief” for the established software services industry.
Sectoral Gainers: Energy and Auto Lead the Recovery
On the flip side of the IT crash, the NIFTY Oil & Gas index emerged as a top performer, advancing over 1.5%. Reliance Industries led this charge, supported by a positive outlook on refining margins and energy demand.
The NIFTY Auto and FMCG sectors also provided much-needed support, rising between 0.5% and 1.25%. Stocks like ONGC, Coal India, and Mahindra & Mahindra featured among the top NIFTY50 gainers, proving that the market breadth remains positive despite the sectoral localized “crash” in technology.
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