Pressure in IT companies
After heavy selling in global technology stocks amid new concerns about the problems caused by AI-powered start-ups, IT stocks also came under heavy selling pressure on Thursday, February 12. Additionally, better-than-expected US jobs data also weakened expectations of an interest rate cut by the US Federal Reserve soon, further adding to the negative sentiment.
The selloff caused the Nifty IT index to fall 4.6% to an intraday low of 33,471.55, making it the worst performing sectoral index among the major indices on the day. The price of IT shares decreased by Rs 1.3 lakh crore, due to which the total market value of these shares during trading remained at Rs 27.6 lakh crore.
The pressure on this sector is increasing with time. After falling nearly 13% in calendar year 2025, the Nifty IT index has fallen nearly 11% so far in 2026. The index is down about 9% in the last three months and about 12% in a month, which reflects the continued selling in the sector.
Why are IT shares falling today?
Indian IT stocks fell sharply today as macro pressures and sector-specific concerns resurfaced. Strong US jobs data dampened expectations of an early interest rate cut, while persistent concerns over the disruption caused by Artificial Intelligence (AI) are weighing on earnings estimates for traditional IT services companies.
Strong US jobs data
In January, job growth in the US suddenly accelerated and the unemployment rate dropped to 4.3%. The US Labor Department said in its delayed report that 1,30,000 jobs were added to non-farm payrolls in January, which is much more than the estimate of 70,000. At the same time, there was a slight reduction in the figures for November and December. The unemployment rate declined to 4.3% from 4.4% in December, which is lower than the estimate of 4.4%.
Dollar strong, rate cut delayed
The US dollar strengthened after better than expected jobs data in January, dealing a blow to expectations of interest rate cuts soon. Investors are now waiting for inflation data to be released on Friday for signals on the next step of US monetary policy. The dollar index is close to 97, due to which there is increasing pressure on risky investments and interest rate dependent sectors like IT.
Concern about changes related to AI
The big concern for the IT sector is that Artificial Intelligence can fundamentally change old working methods and business models. The market is worried that AI could change the way companies spend technology and increase competition from new AI-based players. According to Kotak Institutional Equities, adding AI to companies’ legacy technology requires combining the uncertain nature of the new technology with existing fixed software systems. For this, the system has to be given the ability to understand the context, which is a complex and laborious process.
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