Indian information technology stocks witnessed a broad-based selloff in early trade on Wednesday after a sharp correction in global technology shares overnight reignited concerns about how artificial intelligence could reshape the competitive landscape for software and IT services companies.

The Nifty IT index fell nearly 6 percent to 36,393.70 in early trading, emerging as the worst-performing sectoral index on the National Stock Exchange.

Heavyweights such as Infosys, Tata Consultancy Services, HCL Technologies, Tech Mahindra, Mphasis, Persistent Systems, LTI Mindtree, and Coforge declined between 4 percent and over 6 percent, exerting significant pressure on benchmark indices.

The trigger for the correction was not domestic. Wall Street ended sharply lower in the previous session after investors reacted to developments in the AI space, particularly a new offering from AI developer Anthropic that raised fresh questions about the future demand for traditional software services. Anthropic’s plug-ins for its Claude Cowork agent, capable of automating tasks across legal, marketing, sales, and data analysis workflows, reignited debates on whether AI tools could displace or reduce the need for outsourced IT and professional services over time.

This narrative hit US technology majors first. Nvidia and Microsoft declined nearly 3 percent each, Alphabet slipped ahead of its earnings, while Salesforce and Adobe fell about 7 percent. The Nasdaq Composite dropped 1.43 percent, reflecting the nervousness around how AI-led tools could disrupt established software revenue models.

The spillover into Indian markets was swift because Indian IT companies derive a substantial portion of their revenue from the US market and are deeply integrated into global technology spending cycles. When risk appetite for US tech weakens, Indian IT valuations tend to reprice quickly in response.

Market participants and strategists highlighted that this was less about immediate earnings risk and more about future positioning. Reuters quoted Art Hogan, Chief Market Strategist at B. Riley Wealth, noting that several software companies across the spectrum were being sold off on fears of AI-driven disruption. That view resonated with traders tracking Indian IT names at the open.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, pointed out that the US IT selloff would inevitably drag Indian IT stocks as well, especially given the premium valuations at which many of these stocks trade. In the absence of fresh positive triggers, the sector lacked near-term support to resist global pressure.

What makes this episode significant is the shift in perception. Until recently, AI was largely seen as a structural tailwind for Indian IT firms, with expectations of increased spending on AI integration, data management, and digital transformation projects. However, developments such as Anthropic’s tool have introduced a counterview: that AI could also compress demand for manpower-intensive services, particularly in areas like analytics, documentation, customer support, and back-office processing.

This change in narrative has direct implications for how investors evaluate long-term growth assumptions for Indian IT companies. Many firms have positioned themselves as partners in AI transformation for global clients. But if AI tools begin to automate a larger share of tasks internally for enterprises, the outsourcing opportunity could narrow in certain segments.

From a market standpoint, the fall in IT stocks had a broader impact on indices as well. Given the heavy weight of IT majors in the Sensex and Nifty, the sector’s decline capped gains in other pockets of the market and weighed on overall sentiment in the early session.