With Today’s Crash, Nifty IT Index Enters Bear Territory - Here's What Investors Should Do

HCL Tech, Coforge Share Price: Shares of Indian IT services companies extended their fall for the fifth consecutive session on February 24 on fresh artificial intelligence (AI)-led disruption fears. The Nifty IT index, which tracks the 10 most valuable and actively traded IT companies, crashed over 5 per cent, slipping below the 30,000-level to hit its 31-month low.

The fresh fears came after Anthropic claimed its Claude Code tools can significantly cut the cost and complexity involved in modernising legacy software systems, a key revenue stream for traditional IT services companies.

"The launch of highly efficient enterprise tools such as Anthropic’s Claude Code sparked fears that generative AI could begin eating into traditional Application Development and Maintenance (ADM) revenues, a key revenue stream for Indian IT companies," Sachin Gupta, vice president – research at Choice Broking.

Legacy modernisation, which involves rewriting or upgrading decades-old enterprise software, has long been a steady, high-margin business for large outsourcing companies. Anthropic’s claim that AI can automate a big chunk of this work has raised fears that such projects could require fewer billable hours and smaller teams, which could potentially pressure revenues of traditional IT services firms.

Investors are concerned that if generative AI tools can handle coding, testing and migration tasks more efficiently, the industry’s labour-intensive services model could face structural disruption.

HCL Tech, Persistent, Coforge Shares Drag Nifty IT The Most

Leading the crash, Persistent Systems’ shares plunged as much as 7.87 per cent to hit an intraday low of Rs 4,858 apiece on the NSE. Following it, HCL Technologies shares tumbled up to 7.27 per cent to hit its intraday low of Rs 1,322.50 per share, and Coforge’s stock nosedived nearly 7 per cent to touch its day’s low at Rs 1,198.90 per share.

Index heavyweights Infosys and Tata Consultancy Services (TCS), both of which constitute more than 50 per cent of the weight in the Nifty IT index, also plummeted between 4 per cent and 5 per cent.

All other IT stocks in the index were also trading in deep red, at the time of writing.

Nifty IT Enters Bear Territory

With today’s fall, the IT index has declined more than 21 per cent in February 2026 so far. From its recent high, the index has fallen nearly 26 per cent. According to Gupta of Choice Broking, the Nifty IT index slipped into a “clear bearish phase”.

According to the classic definition, a stock or an index enters bear territory if it falls at least 20 per cent from its recent peak. Analysts across the globe consider a 20 per cent plus correction as a technical marker that sentiment has decisively turned negative.

Once an index slips into bear territory, the fall often feeds on itself. Investors typically become more risk-averse, preferring to sit on cash or shift their funds to safer assets rather than invest fresh capital.

What Should Investors Do

Advising restraint, Sachin Jasuja, Head of Equities and Founding Partner at Centricity WealthTech, said investors should avoid rushing into IT stocks despite the recent correction.

“Selective dips offer value, but broad IT buying risks further pain,” said Jasuja, making it clear that this is not the time for aggressive positioning in the sector.

He advised investors to closely assess the impact of AI before taking fresh calls. “Investors should be waiting and watching for the implications of AI by going through the management conference calls, interviews and expert opinions to understand where the market can head towards,” he said.

Even for those keen to enter, Jasuja stressed caution. “If someone wishes to buy, the momentum for that should be extremely gradual, patient and IT names can be avoided for now until we get further clarity from the managements, upcoming con-calls at Q4 results can give a better clarity.”