February 2026 might be remembered as Black February in the history of the Indian stock market. This is the month when the strongest companies of the Indian economy, especially the IT companies, faced an unprecedented shock. The companies which had once contributed the most in taking the Indian market to great heights, now the market has become merciless towards those same companies. In just a few weeks, the market cap of 50 billion dollars i.e. about Rs 4.5 lakh crore has been lost from the IT sector companies of the country. It would be foolish to consider the decline in the market as normal. At the center of this is ‘Anthropic”s new AI tool and investors’ fear that the decades-old billing model of Indian IT companies is now on the verge of collapse. TCS slipping from second place to sixth place after Reliance is the biggest testimony of this change. Let us try to decode this entire incident, its technical reasons and future strategies by answering the questions related to it.
After all, why is there suddenly so much panic in the Indian market? What was the trigger?
Answer: The focal point of the tsunami in IT shares of the Indian stock market is 30 January 2026. On the same day, American AI company Anthropic launched 11 new automation plug-ins for its Cloud Cowork platform. The news spread like wildfire because these plug-ins could perform tasks in minutes that previously required thousands of engineers for Indian IT companies. Analysts have given it names like ‘SaaSpocalypse’ i.e. (end of software services).
Question: Can AI really destroy the ‘business model’ of Indian IT companies?
Answer: The threat is real and serious. The traditional business model of Indian IT companies has been based on ‘labor arbitrage’ and ‘hourly billing’. That is, the more people and more hours, the more profit. But after the arrival of Anthropic, the story has changed. It is working on a different fund. Such as- Data Analyst Plug-in: Earlier, cleaning and visualizing data which used to take weeks and cost thousands of dollars to a team of analysts, is now being done by AI in 2-3 days without human intervention. And what are the costs? Only 30-40 dollars per month. The second thing is – Legal Plug-in: Thousands of pages of contracts and documents are now being reviewed by AI in minutes. When the work of months will be done in minutes and humans will not be needed, then what will the companies bill for? It is this fear that has forced brokerage firms to say that up to 40% of the revenue of IT service provider companies is at risk.
Question: How terrible is the market decline? What is the condition of big companies?
Answer: If we look at the stock market data, the entire situation becomes clear. In the second week of February 2026, IT stocks have registered the biggest weekly decline since the Corona period (March 2020). TCS, which was once the second most valuable company in the country, has now slipped to the sixth position. Its market cap has fallen below the psychological level of Rs 10 lakh crore. State Bank of India and ICICI Bank have now gone far ahead of that. TCS has lost almost 44% from its all-time high. Infosys and Wipro have also seen a huge decline of 30% to 34%.
Question: Is there a crisis on jobs also? What do the statistics say?
Answer: This is the most worrying aspect of this report – employment i.e. loss of jobs. The era of increasing ‘bench strength’ is over. India’s top five IT companies have added only 17 employees on a net basis in the first 9 months of FY 2026. For comparison, the number was 17,764 in the same period last year. The CEO of Anthropic has also made a big claim in this regard. He believes that 50% of entry-level white-collar jobs (e.g. junior coders, content writers) will disappear in the next one to five years. On the other hand, efficiency in jobs has also emerged as a problem. There is only one qualified engineer available in the country for 10 AI jobs. There could be a shortage of 1.4 million AI professionals by the end of 2026.
Question: Is it all lost or is there any ray of hope left?
Answer: There is an outcry in the market after the fall in the shares of Indian IT companies. But a ray of hope has appeared. JP Morgan, one of the world’s largest and most prestigious financial services institutions (banking), is looking at this decline from a different perspective. Indian IT companies have been called plumbers of the technological world. Why its comment is important is because it is an institution with assets of more than $2.35 trillion. It is the largest bank in the US and one of the most valuable banks in the world in terms of market capitalization. It provides services like investment banking, wealth management and commercial banking. He argues that AI is not magic. These same plumbers like TCS and Infosys will be needed to fix the legacy systems of big companies, integrate AI safely and build data pipelines, so it doesn’t seem right that their work is done. JPMorgan believes stock prices have reached crisis levels, akin to the 2008 recession. But this could actually be seen as a deep value position and a buying opportunity. JP Morgan’s comment is important because it is an institution with assets of more than $2.35 trillion. It is the largest bank in the US and one of the most valuable banks in the world in terms of market capitalization.
Question: What should this entire story mean from an investor’s perspective?
Answer: Shares of Indian IT companies are being sold at almost half the prices compared to their best prices. But this does not mean at all that everything is over. Big financial experts also believe that the Indian IT sector is not dying, but is going through a major change. For the time being, the phase of payment only is over and now the phase of payment for results (payment for output) has started. In this era, the companies which will mold themselves as AI-first companies will continue to dominate the market in future also. At present, as far as investment is concerned, it would be better to do it only with the advice of an authorized expert. Investors can adopt the barbell approach by taking the advice of experts. Under this, on one hand investment is made in heavily fallen large-cap stocks and on the other hand, importance is given to growth companies related to AI infrastructure. In times of major decline, it has been seen that often only large caps are able to survive. TCS and Infosys have strong balance sheets and zero debt, which gives them the strength to invest in AI and transform themselves. As an investor one should avoid catching falling knives under any circumstances. Technically, the shares are currently below their moving average. Instead of investing lump sum money, SIP or Buy on Dips strategy can be the right strategy for investors. Disclaimer: Investing in stock market is subject to market risks. In this news we are not advising investment in any stock. Be sure to consult your registered financial advisor before taking any investment decision. The author or the institution will not be responsible for any financial loss.