**MARKET BRIEF: AI Fears Trigger Historic IT Sell-Off** **Date:** February 5, 2026 **Topic:** Indian IT Sector & The "SaaSpocalypse" **The Flash Crash** Indian IT stocks witnessed their worst single-day widespread rout since **March 2020** on Wednesday, erasing approximately **₹1.9 lakh crore ($23 billion)** in investor wealth within hours. The **Nifty IT index** plunged nearly **6–7%**, decoupling violently from broader market trends. The sell-off was indiscriminate, punishing industry titans and mid-cap players alike: * **Infosys:** Down **~8%**, marking its sharpest fall since April 2023. * **TCS:** Shed **~7%**, wiping out massive equity value. * **LTIMindtree, Coforge & Persistent Systems:** Crashed between **6% and 8%**. * **Wipro & HCL Tech:** Slid **4–5%**. **The Trigger: "SaaSpocalypse"** The panic originated in the US following **Anthropic’s** launch of new "agentic" plugins for its **Claude Cowork** platform. Unlike previous AI tools that assisted humans, these new agents act as autonomous workers—capable of executing end-to-end workflows in legal review, compliance, data analysis, and coding with minimal human oversight. Wall Street analysts, including those at **Jefferies**, have termed this the **"SaaSpocalypse,"** signaling a fear that AI is pivoting from a productivity enhancer to a **workforce replacer**. **The Structural Fear** Investors are pricing in an existential threat to the traditional **"Billable Hour" model**. * **Old Reality:** IT firms charge based on headcount and time spent on projects. * **New Fear:** If an AI agent can perform 40 hours of coding/testing in minutes for pennies, the revenue tethered to human deployment evaporates. The market is no longer viewing AI as a tailwind for IT service providers but as a direct competitor that erodes pricing power and deepens competitive moats. **Analyst & Industry Counter-View** Despite the carnage, key voices argue the market has overreacted: * **Tech Mahindra CEO Mohit Joshi** labeled the sell-off a "significant overreaction," noting that 99% of enterprise environments are "legacy estates" that cannot easily switch to autonomous AI overnight. * **Jensen Huang (Nvidia)** dismissed the notion that AI will render software companies obsolete as "illogical." * **Contrarian Opportunity:** Some analysts suggest the drop offers a bifurcation entry point—favoring niche firms that successfully decouple revenue from headcount over volume-based legacy players. **Bottom Line:** The market has shifted from "AI Hype" to "AI Panic." The coming weeks will determine if this is a temporary sentiment shock or a permanent re-rating of the Indian IT sector.