Market Brief: Indian IT Sector Face AI Turbulence The Indian Information Technology sector is navigating a significant period of volatility. As of February 24, 2026, the **Nifty IT Index** has plunged **3.5%** in a single session, hitting a fresh **52-week low of 30,417.75**. This sharp decline reflects a broader month-to-date collapse of **20%**, wiping out approximately **₹5.05 lakh crore** in investor wealth. Catalysts of the Selloff The primary driver is the accelerating fear of structural disruption from Artificial Intelligence. Sentiment soured following reports that new AI tools, such as Anthropic’s Claude Code, can now modernize legacy systems like COBOL—a task traditionally handled by human developers. This directly threatens the core revenue streams of Indian outsourcing giants. Global triggers have intensified the pressure. A **13.2%** crash in IBM shares overnight served as a warning shot, while renewed uncertainty regarding **15%** U.S. tariff policies has made investors skittish. Major companies are seeing their stocks retreat significantly: * **HCL Technologies** and **Persistent Systems** fell over **4%**. * **Infosys** and **TCS** dropped by **3.7%** and **3.5%** respectively. * **Wipro** declined by **2.9%**. Valuation and Analyst Outlook Market experts are currently divided on the sector's trajectory. HSBC Global Investment Research estimates a **14%-16%** gross deflationary risk to sector revenues over the next few years due to AI. Furthermore, Jefferies has warned that in a worst-case disruption scenario, valuations could see an additional **30%-65%** downside. Conversely, some analysts argue the market is overreacting. Current price-to-earnings (P/E) multiples have reached multi-year lows. **Infosys** is trading at approximately **19.59x** and **TCS** at **20.27x**. Proponents of a "buy" strategy suggest these valuations are becoming attractive for long-term investors, noting that Indian firms are already pivoting to integrate AI into their own service delivery to mitigate risks. Looking Ahead While the immediate trend is "sell on rise," the sector's long-term health depends on its ability to transition from labor-intensive models to AI-driven products. Despite the current bloodbath, the industry is still projected to contribute **10%** to India’s GDP by the end of **2026**, supported by a **₹2,000 crore** government allocation for AI infrastructure. For now, the market remains in a cautious, bearish phase as it awaits stability in global tech indices.