The Indian IT Sector landscape is currently navigating a period of intense volatility. On February 12, 2026, major tech stocks including Infosys, TCS, and Tech Mahindra witnessed a sharp decline of up to 5%, dragging the Nifty IT index to its lowest levels in months. This “SaaSpocalypse”āas some analysts have dubbed itāstems from a combination of cooling investor sentiment following US labor data and a growing existential threat from “Agentic AI.”
š Indian IT Sector Market Performance Snapshot (February 12, 2026)
The following table highlights the significant impact on the Nifty IT index and its primary constituents during early trade:
| Entity / Index | Current Price (INR) | Change (%) | 2026 YTD Performance |
| Nifty IT Index | 33,588.80 | -4.0% | -11.0% |
| Infosys (INFY) | ~1,745.00 | -4.2% | -12.5% |
| TCS | 2,797.30 (52-wk Low) | -2.5% | -9.8% |
| Coforge | ā | -4.3% | -13.1% |
| Tech Mahindra | 1,625.00 | -3.5% | -7.2% |
| HCL Tech | 1,499.20 | -3.4% | -8.5% |
š Indian IT Sector Key Catalysts: Why are IT Stocks Tumbling?
The downturn isn’t a random occurrence; it is driven by two powerful, converging forces: Macroeconomic signals from the US and Technological disruption from Silicon Valley.
1. The US Jobs Report Paradox
The US Bureau of Labor Statistics released January jobs data showing an unexpected addition of 130,000 jobs, nearly double the expected 70,000. While a strong economy is usually good, investors reacted negatively for two reasons:
Interest Rate Longevity: Strength in the labor market gives the Federal Reserve room to keep interest rates high to combat inflation. High rates typically lead to reduced enterprise tech spending.
Sector Concentration: Nearly all job growth was concentrated in healthcare and social assistance. The “Information” and “Professional Services” sectors remained tepid, signaling that the core clients of Indian IT firms are not hiring.
2. The “Anthropic” Threat: Agentic AI
The primary trigger for the “SaaSpocalypse” was Anthropicās launch of Claude Cowork. Unlike traditional chatbots, this is an Agentic AI tool capable of:
Automating End-to-End Workflows: It can conduct legal research, prepare filings, and manage code autonomously.
Direct Competition: By offering industry-specific plugins for legal, sales, and marketing, Anthropic is bypassing the “software middlemen” (SaaS companies and IT consultants).
Revenue Compression: Analysts estimate that if AI agents can do the work of human teams, the “labor-heavy” billing model of Indian ITāwhere revenue is tied to headcount and billable hoursācould shrink by 9-12% over the next four years.
š Financial Health Check: Profit & Loss Trends
Despite the market sell-off, recent quarterly (Q3 FY26) reports show that companies are fighting back through margin expansion and AI-centric deal wins.
Tech Mahindra: Efficiency Over Expansion
Tech Mahindra reported a robust Q3, focusing on operational excellence rather than just headcount.
Net Profit: ā¹1,122 Crore (ā¬ļøUp 14.1% YoY)
Revenue: ā¹14,392 Crore (ā¬ļøUp 8.3% YoY)
EBIT Margin: 13.1% (Expansion of 290 bps)
Key Insight: This was the 9th consecutive quarter of margin improvement, showing a pivot toward high-value services.
Infosys: The Revenue Guidance Raise
While net profit took a slight hit due to one-time labor code impacts, the underlying demand remains resilient.
Net Profit: ā¹6,666 Crore (ā¬ļøDown 2.2% YoY)
Revenue: ā¹45,479 Crore (ā¬ļøUp 9% YoY)
AI Deal Pipeline: AI now forms nearly 74% of all contracts signed in the last six quarters.
Guidance: Raised FY26 constant-currency revenue growth to 3-3.5%.
š TCS Q3 FY26 Financial Performance Snapshot
TCS reported its third-quarter results on January 12, 2026, showcasing a “top-line beat” but a bottom-line impacted by exceptional items.
Revenue from Operations: ā¹67,087 Crore(ā¬ļø UP 4.9% YOY)
Adjusted Net Profitā¹: 13,438 Crore(ā¬ļø UP 8.5% YOY)
Reported Net Profit (PAT): ā¹10,657 Crore(ā¬ļø Down 13.9% YOY)
Operating Margin: 25.2%Stable
AI Workforce: TCS has successfully trained over 217,000 associates in advanced AI skills, doubling its AI-skilled workforce in a single year.
āļø Strategic Analysis: Disruption vs. Opportunity
“AI automation targets labor-heavy models at top Indian IT firms, slashing billable hours and headcount. This is a mix of knee-jerk reaction and a real threat to the legacy IT model.” ā Vinit Bolinjkar, Ventura Securities.
The Bear Case (The Threat)
Seat-Based Pricing Erosion: If one AI agent replaces five human workers, companies pay for fewer “seats” or “licenses,” crushing SaaS revenue.
Low-Level Coding Automation: Much of the maintenance and entry-level coding handled by Indian firms is now being performed by tools like Claude and GitHub Copilot.
The Bull Case (The Recovery)
AI Integration Services: While AI replaces some tasks, enterprises need help implementing AI. TCS and HCL Tech have seen a surge in “Agentic AI” implementation deals.
Valuation Correction: With the Nifty IT index down 11% this year, some analysts believe the sell-off is “overdone,” and stocks are entering a “Buy on Dip” zone for long-term investors.
š What to Watch Next
Investors should keep a close eye on the following upcoming events which will further define the market trajectory:
Quarterly Earnings (Feb 12-15): Results from HUL, Hindalco, and ONGC to gauge broader economic health.
Federal Reserve Commentary: Any hint of a rate cut could trigger a massive relief rally in tech.
Anthropic’s Bengaluru Expansion: The AI giant’s move to set up a “Sovereign AI” office in India’s tech capital may signal a shift from competition to collaboration with local talent.
Disclaimer: This information is based on various inputs fromĀ newsĀ agency.