TCS, Infosys, HCL Tech Bleed as Anthropic's AI Bombshell Rattles Dalal Street

India's information technology sector took a sharp beating on February 24, 2026, as shares of top-tier companies including Tata Consultancy Services (TCS), Infosys, HCL Technologies, and Wipro tumbled on the Bombay Stock Exchange and National Stock Exchange. The sell-off, which saw select stocks declining up to 6%, was triggered by fresh anxiety around The Economic Times reporting that AI startup Anthropic had delivered yet another technological shock to the market — one that investors fear could fundamentally disrupt the outsourcing-heavy business models that have made Indian IT giants so dominant for decades.

What Exactly Did Anthropic Do This Time?

Anthropic, the San Francisco-based AI safety company behind the Claude family of large language models, recently unveiled Claude Code — an agentic AI tool capable of autonomously writing, editing, debugging, and deploying software code with minimal human intervention. This isn't just another code-completion tool. Claude Code can take high-level instructions and independently execute complex, multi-step software engineering tasks end to end. The company was co-founded by Dario Amodei, a former OpenAI research leader who has become one of the most closely watched figures in the global AI race. For investors watching the Indian IT sector, the Claude Code announcement landed like a thunderbolt. The fear is simple and devastating in its logic: if an AI system can do what a team of software engineers does — faster, cheaper, and around the clock — what happens to the companies whose entire revenue model is built on billing clients for those very engineering hours?

How Bad Was the Damage on Dalal Street?

The market reaction was swift and unforgiving. TCS, India's largest IT company by market capitalisation, saw its shares slide by over 3% in intraday trade. Infosys, the Bengaluru-based bellwether of Indian outsourcing, dropped in a similar range. HCL Technologies fell sharply as well, while mid-cap names like Mphasis, LTIMindtree, and Persistent Systems also registered notable declines. The Nifty IT index, which tracks the performance of technology stocks listed in India, lost significant ground, underperforming the broader Nifty 50 index by a wide margin. American Depositary Receipts (ADRs) of Indian IT companies listed on US exchanges fared even worse, tumbling up to 5% as American institutional investors — who closely track AI developments in Silicon Valley — were among the first to react. This is part of a broader pattern of Wall Street panicking as AI disruption sends shockwaves across global technology markets.

Why Are Investors So Spooked by One AI Announcement?

To understand the panic, you have to understand what Indian IT companies actually sell. At their core, firms like TCS, Infosys, and Wipro are labour arbitrage businesses. They hire large pools of skilled engineers in India at a fraction of the cost of equivalent talent in the United States or Europe, and then deploy those engineers to work on software development, maintenance, testing, and IT support projects for multinational clients. This model has minted billionaires, built gleaming campuses, and employed over five million people across India. But it has always carried one existential vulnerability: it depends on human labour being cheaper and more scalable than the alternatives. Artificial intelligence — particularly agentic AI that can independently complete software tasks — is now threatening to make that vulnerability a painful reality.

The Bigger Picture: A Sector Under Siege

Today's sell-off did not happen in isolation. It is part of a rolling series of shocks that have periodically hammered Indian IT stocks ever since generative AI began its meteoric rise in early 2023. Each time a frontier AI lab — whether OpenAI, Google DeepMind, or now Anthropic — releases a tool that edges closer to autonomous software engineering, markets recalibrate their expectations for the Indian IT sector. Analysts have begun openly questioning the long-term growth trajectory of companies that have not yet demonstrated a convincing pivot toward AI-native revenue streams. The worry is not that these companies will disappear overnight — their existing client relationships, domain expertise, and massive workforces give them significant runway — but that their premium valuations may no longer be justified if AI steadily erodes the volume of billable human hours.

What the IT Giants Are Saying

None of the major Indian IT companies issued formal statements specifically in response to the Anthropic news on Monday. However, their recent earnings calls and investor communications paint a picture of companies that are acutely aware of the threat and scrambling to position themselves as AI beneficiaries rather than AI casualties. Infosys has been pushing its Topaz AI platform, which it markets to enterprise clients as an accelerator for AI adoption across business functions. TCS has rolled out its own AI cloud initiative and has spoken extensively about reskilling its workforce of over 600,000 employees. HCL Technologies has been investing in AI-driven products under its HCLSoftware division. The question investors are asking, with increasing urgency, is whether these efforts are transformational enough — or whether they are merely cosmetic adaptations that leave the underlying labour-arbitrage model intact and vulnerable.

Anthropic's Rapid Rise and What It Means for the Industry

Founded in 2021 by former OpenAI researchers, Anthropic has grown at a breathtaking pace, raising billions of dollars from investors including Google and Amazon. Its Claude series of AI models has earned a strong reputation for safety, reasoning ability, and — critically — coding proficiency. Claude Code, its latest agentic offering, represents a significant step beyond simple code generation. Earlier coding assistants like GitHub Copilot would suggest lines or blocks of code for a human developer to review and accept. Claude Code, by contrast, is designed to autonomously handle entire workflows: reading a codebase, understanding the objective, writing new code, running tests, identifying failures, and iterating until the task is complete. That is not a coding assistant. That is a software engineer — or at least a very capable approximation of one. India, for its part, has been navigating this AI era with growing urgency, as explored in this detailed look at India in the AI era and what it means for the country's tech workforce.

Will AI Actually Replace Indian IT Workers?

This is the question that cuts to the heart of the matter — and the answer, as with most questions about AI disruption, is nuanced. In the short term, wholesale replacement is unlikely. Enterprise software environments are extraordinarily complex, politically tangled, and laden with legacy systems that resist simple automation. Clients need trust, accountability, and human judgment in ways that current AI tools cannot fully replicate. Many of the tasks performed by Indian IT professionals involve not just coding but client communication, requirement gathering, project management, and navigating the organisational dynamics of large corporations — skills that remain stubbornly human for now. However, the medium to long-term picture is considerably more uncertain. If AI tools continue improving at their current pace, the number of engineers required to deliver a given scope of work could fall dramatically. That means even if Indian IT companies retain their clients, they may need far fewer people to serve them — which, for a sector that employs millions, is a genuinely alarming prospect.

The Valuation Question: Are IT Stocks Still Worth Their Price?

Indian IT stocks have historically commanded premium valuations relative to many other sectors, justified by their consistent earnings growth, strong dollar-denominated revenues, and high return on equity. But those valuations were priced for a world in which demand for human software engineering talent would keep growing indefinitely. If AI begins compressing that demand, the earnings growth story weakens — and with it, the justification for those premium price-to-earnings multiples. Several analysts have already begun trimming their target prices for Indian IT majors, and institutional investors appear to be recalibrating their portfolios accordingly. The ADR declines seen today suggest that international money — which tends to be faster-moving and more sensitive to Silicon Valley developments — is leading the charge on the way down.

Opportunities Amid the Gloom

It would be a mistake to write off the Indian IT sector entirely. History is full of examples of industries that survived and even thrived by adapting to technological disruption. The rise of cloud computing, for instance, was initially seen as an existential threat to IT services companies — and yet firms like Infosys and TCS successfully pivoted to become major cloud migration and management partners for their clients. A similar opportunity exists with AI. Companies that can credibly position themselves as trusted partners for enterprise AI adoption — helping clients navigate model selection, data governance, integration with legacy systems, and responsible deployment — stand to benefit enormously from the very wave that currently seems to threaten them. The Indian IT sector has deep client relationships, a proven track record of managing complex transformations, and a large talent pool that can, in principle, be retrained for this new era.

What Should Retail Investors Do?

For retail investors watching their IT holdings decline, the temptation to panic-sell can be strong. But knee-jerk reactions to single-day sell-offs driven by headline anxiety rarely serve long-term investors well. The more productive approach is to evaluate each company on its actual AI strategy, the quality of its management, its client concentration, and the pace at which it is genuinely pivoting its revenue mix toward AI-driven services. Companies that are merely talking about AI without demonstrating tangible results in their financials deserve more scrutiny. Those that can show real growth in AI-related revenues, genuine productivity gains, and a credible roadmap for the next three to five years may well reward patient investors — even if the near-term price action remains volatile. As always, diversification across sectors remains the most reliable hedge against sector-specific disruption of this kind.

The Road Ahead for Indian IT

Today's market reaction is a symptom of a deeper, longer-running anxiety about the future of knowledge work in an age of advanced AI. Indian IT companies are not alone in facing this uncertainty — so are law firms, accounting practices, consulting firms, and virtually every other sector that monetises human cognitive labour. But few sectors are as directly and visibly in the crosshairs as Indian IT, because the very specificity of what these companies do — writing and maintaining software — is precisely what the latest generation of AI tools is designed to do. The Anthropic announcement is not the end of that story. It is one more chapter in a fast-moving narrative whose conclusion remains genuinely uncertain. What is certain is that the Indian IT sector cannot afford complacency, that investors will continue to demand answers about AI strategy, and that the companies which figure out how to harness AI rather than merely survive it will define the next era of Indian technology.

Source & AI Information: External links in this article are provided for informational reference to authoritative sources. This content was drafted with the assistance of Artificial Intelligence tools to ensure comprehensive coverage, and subsequently reviewed by a human editor prior to publication.