The tech sector stocks continue to bleed. This follows the sharp selloff in technology sector seen overnight in the US markets. Leading AI major, Anthropic had announced updates to the Claude Code and this is touted to be a key factor that cab modernize the key ‘Cobol’ program. IBM, saw a sharo selloff, as maintenance and update of these old Cobol systems is a key part of its business.
The Nifty IT Index is down 4% and stocks like Persistent, Infosys, HCLTech have seen over 5% cut each. Market veteran Ajay Bagga said, “Global event risk stays the dominant narrative. With old stalwarts like IBM dropping 13% on AI fears, AI remains a disruptive force.”
In fact, the Nifty IT Index is down to 10-month lows. Anand James, Chief Market Strategist, Geojit Investments believes, “Oscillators being oversold, and with some of them showing positive divergence, recovery signs were beginning to be visible in the last few days. Standard deviation studies point to 29,961 as the nearest support for the Nifty IT Index. The upside reversal level is seen at 31,300, with further resistance seen at 36,200 for the Nifty IT index.”
Let’s take a look at the key reasons of what is putting the spotlight firmly on tech counters today
AI fears deepen after IBM’s sharp fall
The anxiety around artificial intelligence intensified after a steep fall in shares of International Business Machines. Popularly known as “Big Blue”, IBM saw its stock tumble 13% in a single session.
The decline in the share price is related to concerns towards the newer AI-driven tools. This includes those developed by Anthropic and other players that could reshape demand for traditional enterprise software and services. Anthropic has announced fresh updates for its ‘Claude Code’ tool. This is being seen as a tool that could potentially modernise ‘Cobol’ programs significantly faster and also at a cheaper rate.
The reason why this spooked IBM investors is because one of the key revenue generators for IBM is maintaining and updating Cobol systems in a host of mainframe computers across ATMs, payment platforms and bookng systems of the airlines. The street is concerned anout how this could hurt IBM’s profitability.
For Indian IT firms that provide outsourced services, automation and AI-led efficiencies raise questions about pricing power, billing rated and long-term growth visibility. A host of Indian IT services companies like Infosys, TCS and Wipro use the Cobol systems as well.
Jefferies turns cautious on Indian IT majors
The global brokerage Jefferies in its latest report on the IT sector stocks has taken a more guarded view. The brokerage downgraded six domestic software firms, including TCS and Infosys, citing concerns about structural shifts in the business model due to AI tools.
For TCS, the rating was cut to Underperform, and the target price reduced to Rs 2,350, implying nearly 33% downside from earlier estimates. Infosys was downgraded to Hold, with the target trimmed to Rs 1,290, while the US-listed target was slashed to $14.31 from $20.82, a cut of about 31%.
HCLTech was downgraded to Hold with a target of Rs 1,390, and Wipro continues to be rated Underperform with a reduced target of Rs 180.
The brokerage’s concern goes beyond the next quarter’s earnings. According to its report, the bigger question is how artificial intelligence could permanently alter the way IT services are delivered, priced and scaled.
Tech ADRs slide in the US
The first signal of stress comes from the United States. Shares of Indian IT companies trading there fell sharply in the previous session. Infosys’ ADR dropped around 5%, while Wipro declined close to 3%.
The selloff was not company-specific. Instead, it was part of a broader pullback in global tech stocks amid renewed worries that artificial intelligence could disrupt traditional IT services models faster than expected.
For Indian IT firms that derive a large chunk of revenue from overseas clients, particularly the US, this global nervousness matters.
Global uncertainty adds to expiry-day volatility
Along with the other factors, the global uncertainty also is weighing on the sentiment. According to Bagga, along with AI, “the tariffs drama and uncertainty, and we have three negative overhangs on the markets. And there is the fourth in the form of the canary in the private credit coal mine, the Blue Owl fund redemptions freeze. Markets have not sold off on that, yet, though alternative fund managers got sold off last week on the news. The exposure in the private credit markets is nearly $ 3.5 trillion , and the risk we run is that it may be a 2007 moment that is being complacently neglected.”