**MARKET BRIEF: AI DISRUPTION FEARS TRIGGER IT SECTOR ROUT** **Wednesday, February 4, 2026** Indian IT stocks faced a severe selloff today as fears of artificial intelligence replacing traditional service models turned into tangible market panic. The slump was triggered by developments at US-based AI firm **Anthropic**, which launched advanced "agentic" plugins for its Claude platform capable of automating complex workflows—specifically legal review, sales, and compliance tasks—that form the backbone of many outsourcing contracts. **Market Impact** The **Nifty IT index** plunged approximately **6-7%**, marking its sharpest single-day decline in nearly a year. The rout erased an estimated **₹2 lakh crore** in investor wealth within a single session, dragging the broader benchmarks despite resilience in other sectors. **Key Stock Movements** * **Infosys:** Plummeted **~7-8%**, leading the losses among heavyweights. * **TCS:** Shed **~6-7%**, falling below critical valuation thresholds. * **LTIMindtree & Persistent Systems:** Mid-cap players were hit hardest, dropping **6-8%**. * **Wipro:** Declined **~4-5%**, struggling to hold support levels. **The "SaaSpocalypse" Narrative** Investors are reacting to a shift in sentiment dubbed the "SaaSpocalypse" on Wall Street. The concern is no longer just about AI competition, but existential obsolescence. The new tools introduced by Anthropic demonstrate the ability to bypass traditional "per-seat" or "billable hour" models, potentially shrinking the total addressable market for legacy IT service providers. **Global Correlation** The domestic crash mirrored a **1.4%** drop in the **Nasdaq** overnight, where major tech giants like Microsoft and Nvidia also saw corrections. Global capital is currently reassessing valuations for software and services firms, pricing in the risk that AI agents could deflate long-term profitability faster than anticipated. **Outlook** While some analysts argue the reaction is an oversold panic, the immediate sentiment remains fragile. The sector is now facing a structural "prove-it" phase, where companies must demonstrate they can monetize these AI agents rather than be replaced by them.