Nifty IT bleeds 6%: Why Infosys, TCS, HCL Tech, Wipro, Coforge, Tech Mahindra and other stocks are falling today?

Nifty IT Index Crash: The Nifty IT index on Wednesday (Feb 4) crashed as much as 6 per cent on growing fears that artificial intelligence could supplant traditional software. The index traded at 36,548, down 5.35 per cent or 2,063 points at 10 AM with all the 10 constituents sitting in the read. The Nifty IT was the top losing sectoral index.Individually, Persistent Systems and Infosys were the top losers as both tumbled more than 6 per cent each. LTIM, Coforge and TCS lost more than 5 per cent each, followed Mphasis, HCL Tech, Tech Mahindra, Wipro and Oracle Financial Services Software (OFSS).Why IT Stocks Are Falling?The selloff in Indian IT stocks was in line with the losses in the US tech heavyweights overnight. The Nasdaq 100 index dropped 1.4 per cent as traders feared that AI could pose a significant challenge for traditional IT services companies after AI developer Anthropic’s launch of a legal tool for its Claude AI chatbot.Notably, AI adoption is emerging as a key headwind for traditional tech companies, raising concerns over long-term demand. Indian IT firms derive a large share of their revenue from the US, making them sensitive to shifts in America.Anthropic’s AI ToolAccording to a Reuters report, investors are pointing to a recently updated artificial intelligence chatbot by Anthropic as the main culprit behind the selloff in IT counters.Last Friday, Anthropic launched plug-ins for its Claude Cowork agent that would automate tasks across legal, sales, marketing and data analysis. This has sparked worries of disruption in the data and professional services industry, which were once seen as major beneficiaries of the AI era.Anthropic said that its tool could automate legal work such as contract reviewing, non-disclosure agreement triage, compliance workflows, legal briefings and templated responses. It, however, said that the plugin did not provide legal advice and that AI-generated analysis should be reviewed by licensed attorneys before being relied upon for legal decisions.The company also announced a number of other open-source tools to automate a range of professional activities, including sales and customer support.Anthropic was founded in 2021 by Dario Amodei, its chief executive, and other former staff members from OpenAI, which developed ChatGPT.IT Stocks: Avoid Fresh Buying Meanwhile, ET NOW panelist Kunal Bothra has advised investors to stay cautious and avoid fresh buying in the IT. He said that IT stocks may start looking attractive after a 5-6 per cent downtick, but he suggestion is not to buy afresh at current levels as many counters are currently trading around key long-term moving averages."Many of the IT stock are close to their long-term moving averages. Infosys is around Rs 1,550-1,545 which is very close to its long-term moving averages. This makes Infosys a risky bet at current levels. Such is the case with many ither largecap IT stocks. If selling pressure intensifies near these levels in Infosys, it will trigger further downside and we can see continued selling pressure in the near term. Therefore, my suggestion is to avoid IT for now," he said.(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)