India’s Tech Stocks Plummet $68.6B as AI Automation Fears Grip Market

Indian technology stocks have experienced a massive $68.6 billion selloff in February as investors worry about artificial intelligence disrupting the country's IT services industry. The tech-heavy market indices are underperforming compared to other Asian markets amid concerns that AI automation could reduce demand for traditional IT services.

India’s stock market is struggling to keep pace with other Asian markets this February, weighed down by massive losses in technology companies totaling $68.6 billion as investors grow increasingly worried about artificial intelligence threatening traditional IT business models.

The country’s major stock indices – the Nifty 50 which gained just 0.4% and the Sensex which dropped 0.1% this month – are both trailing behind broader Asian and emerging market benchmarks.

Technology companies, which represent about 11% of India’s main stock index and rank as the second-largest sector by weight, have driven most of the market weakness.

The ten technology companies in the Nifty IT index have collectively shed $68.6 billion in market value through February’s trading sessions, with the sector index plummeting 21% and heading toward its worst monthly decline in almost 23 years.

Every single company in the index has fallen between 16.8% and 27% during February. Coforge leads the percentage losses, dropping 26.8%, while industry giants Tata Consultancy Services and Infosys have suffered the largest dollar losses at approximately $21.9 billion and $16.3 billion respectively.

The massive sell-off stems from mounting fears that rapidly evolving automation technology could shorten project durations and undermine the labor-heavy business approach that supports India’s approximately $300 billion IT services sector.

Market participants have focused particular attention on AI-powered automation initiatives from American companies like Anthropic and Palantir, amplifying worries about accelerated project completion, margin pressure, and fewer billable working hours.

Financial analysts caution that India’s technology sector may face additional strain if artificial intelligence begins cutting into application services revenue, which typically represents 40% to 70% of these firms’ total income.

“There are no easy answers to whether AI eventually renders IT services obsolete over the long term,” said analysts led by Abhishek Pathak of Motilal Oswal.

The Motilal Oswal research team added, “The narrative that AI is coming for not just IT but large swathes of the economy could be too strong to shake, at least in the short term.”

Any downturn or shrinkage in India’s technology industry, whether through workforce reductions or decreased recruitment, could immediately impact both home and office real estate markets. The Nifty Realty index has climbed about 2% in February after falling nearly 18% over the previous three months.

Worries about Indian technology firms have also intensified foreign investor selling in the sector during 2026 thus far.

Although foreign portfolio investors have become net purchasers of Indian equities in February with 196.75 billion rupees in inflows, they withdrew roughly 110 billion rupees ($1.21 billion) from technology stocks in the first half of February, following record net sales of 750 billion rupees in 2025.