Nifty IT Index Suffers Worst Monthly Drop in 17 Years Amid AI Disruption Fears
The Nifty IT index plunged a staggering 19.5% during February, marking its most severe monthly decline in 17 years. This dramatic fall was driven by mounting fears of artificial intelligence-led disruption, which triggered heavy selling across technology services stocks. The index declined in 12 out of the 21 trading sessions throughout the month, resulting in a massive erosion of nearly Rs 5.7 lakh crore in market capitalisation, according to data from the ET Intelligence Group.
Historical Context and Market Impact
This sharp decline represents the worst performance since September 2008, when the index dropped nearly 21% during the peak of the global financial crisis. The selling pressure intensified significantly after US-based artificial intelligence firm Anthropic unveiled new tools—Claude Cowork and Claude Code. These developments sparked serious concerns about the long-term demand outlook for traditional IT outsourcing services, triggering a broader sell-off in technology stocks across both US and Indian markets.
February Trading Performance and Individual Stock Analysis
Despite the steep monthly decline, the Nifty IT index managed to edge up 0.16% on Friday, closing at 30,603.85. This minor gain occurred even as the benchmark Nifty fell 318 points, or 1.25%, to settle at 25,178.65. The broader Nifty index recorded a 0.6% decline for the entire month of February.
Among individual stocks, Coforge emerged as the worst performer during this turbulent period. Several other major IT companies also underperformed the index significantly:
- LTIMindtree, Tech Mahindra, Persistent Systems and Infosys all fell between 21% and 28% during February
- Oracle Financial Services Software declined the least at 10.7%
- Wipro followed with relatively moderate losses
- Tata Consultancy Services, Mphasis and HCL Technologies recorded declines in the range of 15–18%
Broader Market Implications and Future Outlook
The substantial decline in the Nifty IT index reflects growing investor anxiety about how artificial intelligence technologies might disrupt traditional IT service models. As AI tools become more sophisticated and capable of handling complex tasks previously requiring human intervention, market participants are reassessing the growth prospects for conventional IT outsourcing companies.
This market movement highlights the increasing importance of technological adaptation and innovation within the IT sector. Companies that can successfully integrate AI capabilities into their service offerings may be better positioned to weather this transition, while those relying heavily on traditional outsourcing models face significant challenges ahead.
The February performance serves as a stark reminder of how rapidly changing technology landscapes can impact financial markets, particularly in sectors directly exposed to technological disruption. Investors will be closely monitoring how IT companies respond to these challenges in the coming months.
