IT shares fall! Shares of Indian IT companies Infosys, Wipro, HCL Tech, Tata Consultancy Services (TCS) and Persistent Systems fell in early trade on Wednesday, sending the Sensex down by more than 100 points.
The decline was due to concerns about the growing influence of artificial intelligence, which intensified following the launch of new workplace productivity tools by Anthropic.
The negative sentiment reflected weakness on Wall Street, where the technology-heavy benchmark Nasdaq fell 1.4 per cent, wiping out about $300 billion in market capitalisation across the sector.
Shares of major IT companies, including Infosys, Wipro, HCL Tech and Persistent Systems, fell up to 6 per cent in early trade.
Why are IT sector shares falling?
- Selling in IT stocks was triggered by a US-based announcement from AI startup Anthropic, which introduced a product aimed at corporate legal teams.
- The company, known for developing cloud chatbots, said the tool can automate a number of legal tasks, such as reviewing contracts, sorting out non-disclosure agreements, managing compliance processes, preparing legal briefs and generating standardised responses.
- The launch has deepened the cautious outlook on software stocks, as rapid AI adoption grows uneasier among investors about increased competition and potential pressure on margins.
- Market participants are concerned that as artificial intelligence solutions become more advanced, it may become harder for technology companies to maintain pricing power and protect profitability.
International broking firm Jefferies said in a report on February 2 that it has cut its allocation to the information technology sector as part of a reshuffle in its India model portfolio.
Following the revision, the IT sector is now given a weighting of 5.6 in Jefferies’ India portfolio, much lower than the 9.7 weighting given to the sector in the MSCI India index.
The broking’s cautious stance comes amid continued selling by foreign portfolio investors, with foreign funds pulling out nearly $34 billion from Indian equities in the last 16 months, a period during which IT stocks have faced the heaviest pressure.
American IT sector shares fall
US equities also reflected technology-based weakness. The S&P 500 fell 0.84 per cent to 6,917.81, while the Nasdaq Composite dropped 1.43 per cent to 23,255.19.
The Dow Jones Industrial Average proved more stable, closing 0.34 per cent lower at 49,240.99.
Among major stocks, Nvidia and Microsoft fell about 3 per cent each.
Alphabet slipped 1.2 per cent ahead of its earnings announcement on Wednesday, and Amazon slid 1.8 per cent ahead of releasing its quarterly results on Thursday.
what anthropic said
Addressing market concerns, Anthropic clarified that its newly launched plugin is not intended to provide legal advice.
“AI-generated analyses should be reviewed by licensed attorneys before being relied upon in legal decisions,” the company said. In addition to legal-orientated tools,
Anthropic unveiled a series of open-source offerings designed to automate a broad spectrum of business activities ranging from sales tasks to customer service operations.
Founded in 2021, Anthropic was founded by chief executive Dario Amodei along with several former employees of OpenAI, the developer of ChatGPT.
(Disclaimer: The recommendations and views given by experts on the stock market, other asset classes or personal finance management are their own. These opinions do not represent the views of The Times of India.
