• IT stocks in India fell for a third straight session on Feb 6, driven by renewed fears over rapid AI advances.
  • Nifty IT index slipped about 3% to 35,457.80 at 9:45 a.m. IST on Friday.
  • Major names including Coforge and TCS dropped as much as 4% in early trade.
  • Investors are weighing how fast AI could reshape services, margins and hiring in the sector.

What happened

Indian IT stocks extended losses for a third consecutive session on February 6 as mounting concerns about rapid advances in artificial intelligence rattled investors. The selloff pushed the Nifty IT index down roughly 3% to 35,457.80 at 9:45 a.m. IST, with leading companies such as Coforge and Tata Consultancy Services (TCS) declining up to 4% in early trade.

Why AI is spooking the market

Investors are increasingly anxious about how faster-than-expected progress in AI could change the business model of traditional IT services. The immediate worries include potential automation of tasks that generate large volumes of billable hours, pressure on pricing and margins, and the need for rapid reskilling—factors that can hurt near-term revenue growth even as longer-term opportunities emerge.

This tension—between opportunity and disruption—has prompted profit-taking and forced market participants to reprice high-valuation names perceived as most exposed to an AI-driven overhaul.

Who was hit hardest

Coforge and TCS were among the more notable decliners, each falling as much as 4% in early trading on Friday. Broader mid- and large-cap IT firms also saw declines as the index pulled back, reflecting a sector-wide reassessment rather than isolated stock-specific news.

What this means for investors

Short term: Volatility is likely to persist while investors digest headlines on AI capabilities, vendor guidance, and contract wins or losses. Stocks with premium valuations may see sharper swings as forecasts are revised.

Medium-to-long term: AI presents both risk and reward. Firms that successfully integrate AI into their services, retrain staff and pivot to higher-value offerings could emerge stronger. Those slower to adapt may face margin pressure and client churn.

What to watch next

  • Corporate commentary: Management guidance and client wins in earnings or investor calls will be closely watched for signs of AI-driven demand or disruption.
  • Order books and billing metrics: Any signs of pricing pressure, reduced deal sizes or client hesitation could extend the weakness.
  • Policy and regulation: Regulatory moves on AI, data and employment could materially affect timelines for adoption and costs.

Bottom line

The third straight session of declines highlights how quickly investor sentiment can shift when a disruptive technology like AI accelerates. While fears are real, outcomes will vary across companies—making selective analysis of business models, client mixes and execution plans crucial for investors deciding whether to buy the dip or stay cautious.

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