Indian IT Stocks Face Volatility Amid AI Disruption Concerns and Market Rebound

Indian IT stocks have experienced significant volatility in February, with the Nifty IT index falling about 21% amid investor concerns over AI-driven disruption to traditional service models. The sell-off was triggered by new AI tools from startup Anthropic and fears of automation reducing demand for legacy IT services. However, analysts and industry leaders, including Anand Mahindra and Anthropic's CEO, suggest the impact may be overstated, highlighting ongoing AI partnerships and opportunities for IT firms to evolve. While some brokerages have downgraded IT stocks citing AI risks and pricing pressures, others see attractive valuations and potential for moderate growth. The sector's future may hinge on adapting to AI integration, outcome-based pricing, and maintaining relevance in complex enterprise environments.