IT stocks lead market slide on AI-disruption fears
Investors expect faster automation, shorter project timelines to drag IT firms' revenues
Benchmarks give up gains from India-US trade deal
IT index on track for worst week in nearly 6 years
Updates for morning trade
By Bharath Rajeswaran and Vivek Kumar M
Feb 13 (Reuters) - Indian shares declined in early trade on Friday, with information technology stocks dropping as much as 5%, mirroring losses on Wall Street and Asian markets amid a global tech selloff.
The Nifty 50 .NSEI fell 1.01% to 25,545.9, while the BSE Sensex .BSESN shed 0.98% to 82,859.3, as of 10:29 a.m. IST.
The blue-chip indexes have fallen about 0.5% this week, eroding gains triggered by the India-U.S. interim trade deal.
Fears about disruption from artificial intelligence-driven automation have roiled India's IT shares .NIFTYIT this week, putting them on track for their worst showing since March 2020, when markets slumped after COVID-19 lockdowns were announced.
The IT index is down 11.4% this week and has lost 16.6% so far in 2026, surpassing the 12.6% drop in the whole of last year.
AI could accelerate automation of routine work and shorten delivery timelines, piling pressure on the traditional headcount-based outsourcing model for IT firms, analysts have said.
Growing AI adoption could also prove to be a hurdle for new deals, hitting the firms' revenue growth, they said.
"Waning expectations of a near-term U.S. rate cut and pressure due to the evolving concerns over potential disruptions from AI is intensifying the sharp sell-off in IT stocks, hurting market sentiment," said Bajaj Broking Research.
Overnight, the technology-heavy Nasdaq Composite .IXIC tumbled 2% after Cisco Systems CSCO.O posted quarterly adjusted gross margin below estimates and as investors were cautious ahead of U.S. inflation data, due on Friday.
Stronger-than-expected U.S. jobs data in January has dented expectations of a near-term rate cut by the Federal Reserve.
Asian markets .MIAPJ0000PUS were down 0.8%.
In India, all 16 major sectors fell on Friday.
The metal index .NIFTYMET fell 3%, dragged by Hindalco HALC.NS which slumped 6% after posting a 45% fall in quarterly profit.
The selloff extended to broader markets as well, with the small-caps .NIFSMCP100 and mid-caps .NIFMDCP100 falling 2% and 1.8%, respectively.
India's Nifty IT index set for steepest weekly decline in six years https://reut.rs/4bTNeyH
(Reporting by Bharath Rajeswaran and Vivek Kumar M in Bengaluru; Editing by Rashmi Aich, Janane Venkatraman and Mrigank Dhaniwala)
((bharath.rajeswaran@thomsonreuters.com; +91 9769003463;))