Indian Markets Lag as $68.6 Billion IT Selloff Deepens on AI Fears

Indian equities have underperformed their Asian and emerging market peers in February, weighed down by a massive $68.6 billion erosion in information technology stocks amid rising concerns over artificial intelligence-led disruption. The Nifty 50 has gained just 0.4% this month, while the BSE Sensex slipped 0.1%, trailing broader regional benchmarks. The weakness has largely stemmed from heavy selling in technology shares, which hold significant weight in the benchmark indices.

The Nifty IT Index has plunged 21% in February, marking its worst monthly performance in nearly 23 years. All 10 constituents have declined between 16.8% and 27%. Coforge Ltd emerged as the steepest percentage loser, while Tata Consultancy Services and Infosys Ltd led the value erosion, collectively shedding over $38 billion in market capitalisation.

Investor anxiety has intensified over the rapid rise of AI-driven automation tools from U.S. firms such as Anthropic and Palantir Technologies, which could compress project timelines and disrupt India’s labour-intensive IT services model. Foreign portfolio investors have accelerated outflows from the sector, pulling roughly 110 billion rupees from IT stocks in the first half of February, even as broader market inflows remained positive. Analysts warn that if AI begins to materially dent application services revenue, further downside pressure could follow.

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