NIFTY IT Bloodbath: TCS, Infosys, HCLTech Crash 21% Amid AI & Tariff Fears

New Delhi, February 24, 2026: The Indian IT sector is currently navigating its most turbulent period in recent years. As of Tuesday, February 24, 2026, the NIFTY IT index has witnessed a staggering 21% decline over the past month, wiping out nearly ₹5.05 lakh crore in market capitalization.

What began as a cautious correction has transformed into a full-scale rout, with heavyweights like Tata Consultancy Services (TCS), Infosys, and HCLTech leading the descent. Here is a comprehensive look at the factors driving this sell-off and what investors should watch for today.

1. The “Anthropic Shock”: AI Disruption Moves Beyond Hype

The primary catalyst for the current bloodbath is a fundamental shift in how the market perceives Artificial Intelligence (AI). On Monday, AI firm Anthropic announced significant updates to its Claude Code tool, demonstrating its ability to automate the modernization of legacy COBOL systems.

• Why it matters: Indian IT firms derive a massive portion of their revenue from “managed services” and legacy system maintenance. Automation of these tasks directly threatens the labor-intensive business model of firms like Infosys and TCS.
• Global Ripple Effect: The news triggered a 13% overnight plunge in IBM shares in the US, which spilled over into the Indian markets. Investors now fear that AI isn’t just a tool for these companies to use, but a competitor that could replace their core services.

2. Global Macro Headwinds: Tariffs and Tensions

Beyond technology, the geopolitical climate is adding fuel to the fire.

• The Trump Factor: Recent remarks from US President Donald Trump regarding increased global tariffs have created a “risk-off” sentiment.
• Trade Uncertainty: With the European Union pausing major trade deals in response to shifting US tariff policies, global enterprises are expected to tighten their IT spending budgets, further squeezing the pipeline for Indian service providers.

3. Brokerage Downgrades and Valuation Scrutiny

Leading global brokerages have turned decidedly bearish on the sector:

• Jefferies recently downgraded six major Indian IT software companies, including TCS and Infosys. They cautioned that in a “worst-case disruption scenario,” sector valuations could face an additional 30–65% downside.
• CLSA cut price targets for eight IT stocks (including HCLTech and Wipro), citing a lack of market share gains and structural revenue risks.

Performance Snapshot (Tuesday, Feb 24 – Early Trade)

Stock	Performance	Key Concern
TCS	-3.5%	Exposure to BFSI legacy systems being targeted by AI.
Infosys	-3.7%	Large-scale managed services vulnerable to automation.
HCLTech	-4.0%	Heavy sell-off following downward revision of growth targets.
Coforge	-4.1%	Biggest mid-cap loser in the early session.

4. Tuesday Outlook: What to Watch

As Dalal Street processes the “IT Rout,” several key levels and events will determine if the floor is in sight:

• NIFTY IT Support Levels: The index hit a fresh 52-week low of 30,417.75. Analysts suggest that if the index fails to hold the 30,000 mark, technical selling could intensify.
• FII Sentiment: Foreign Institutional Investors (FIIs) have offloaded over ₹11,000 crore in IT stocks this February. Watch for whether they rotate this capital into domestic-facing sectors like Banking or Capital Goods.
• State of the Union Address: Markets globally are waiting for President Trump’s address later today, which could provide more clarity—or more volatility—regarding trade tariffs.

Conclusion

The Indian IT industry is at a crossroads. While the “software is dead” narrative may be premature, the era of easy growth through labor arbitrage is facing its greatest challenge yet. For investors, the focus has shifted from quarterly earnings to long-term structural viability in an AI-first world.