Nifty IT Logs Steepest Monthly Fall Since 2008 as AI Shock Triggers Heavy Selling

Indian technology stocks closed February under deep strain, with the Nifty IT index registering its sharpest monthly decline since the global financial crisis of 2008. The index fell close to 19 percent over the course of the month, reflecting sustained selling pressure across frontline software exporters and mid-tier technology firms.

The sharp correction gathered pace in the final week after a high-profile security breach at US-based artificial intelligence firm Anthropic unsettled global technology counters. The episode revived concerns over vulnerabilities linked to rapid AI adoption and intensified scrutiny around cybersecurity preparedness across the sector. Investors responded by cutting exposure to IT stocks, which have already faced valuation compression amid slowing discretionary spending in key overseas markets.

Heavyweights bore the brunt of the decline as foreign institutional investors trimmed positions in export-oriented counters. Analysts said the selloff was driven not only by the immediate trigger abroad but also by broader unease over how generative AI could alter revenue models for traditional IT services companies.

Market participants noted that while long-term structural demand for digital services remains intact, near-term earnings visibility has weakened. With global clients reassessing technology budgets and risk frameworks, Indian IT firms are expected to face a period of cautious spending and tighter deal flows.

The February slide has erased a substantial portion of last year’s gains in the technology pack, leaving the sector at a critical juncture as investors weigh disruption risks against long-term competitiveness.