Mumbai, February 12 (IANS). The stock market witnessed heavy selling in the IT sector in Thursday’s trading session, causing the Nifty IT index to fall 5.51 per cent to a four-month low. Investors appeared worried about the growing impact of AI and low expectations of an interest rate cut in the US soon.
The total market capital (market cap) of Nifty IT companies declined to Rs 27,32,579 crore, i.e. a loss of about Rs 1.6 lakh crore. Shares of big software companies fell by more than 5.5 percent. Shares of Tata Consultancy Services (TCS) fell 5.48 per cent to Rs 2,750, its lowest in 52 weeks. Infosys also fell by 5.48 per cent, Tech Mahindra fell by 6.40 per cent, while shares of HCL Tech, Mphasis and Wipro declined by 4.5 to 5 per cent.
Market experts say that the advent of advanced AI technology may impact traditional IT services, from which Indian IT companies earn huge profits. Recently, a company named ‘Anthropic’ has launched a new AI tool named ‘Cloud Cowork’, which is said to be capable of doing the entire business work automatically.
It is being said that this AI system has such automation tools that can perform multi-step tasks on its own. Earlier, tasks which required separate software can now be done through a single platform. This may reduce demand for traditional software companies.
International brokerage firm Jefferies has named this situation ‘Sapocalypse’, which means that AI could replace traditional software companies.
Some experts have warned that if AI replaces traditional services, companies’ income could decline by up to 40 percent.
Apart from this, strong employment data from America also influenced the market. Last month, 1.3 lakh new jobs were added in America and the unemployment rate decreased to 4.3 percent. This indicated that the US Federal Reserve would not reduce interest rates soon, which increased pressure on IT stocks.
Brokerage firm Motilal Oswal also said that AI can reduce the need for old software and testing services in the future. The new AI system is capable of performing the entire task on its own, reducing dependence on traditional software services.
–IANS
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