On February 18, 2026, the Indian IT sector faced its steepest single-day rout in months, with the Nifty IT Index crashing 2.5% to 32,265.20. The primary catalyst was Anthropic’s release of Claude Sonnet 4.6, which demonstrated near-human proficiency in autonomous “computer use” and coding—tasks that form the core revenue of India’s outsourcing giants.
Market Performance Summary (Feb 18, 2026)
The sell-off was broad-based, wiping out billions in market capitalization as investors braced for a structural shift from “headcount-led” to “outcome-led” business models.
| Stock Name | Price Change (%) | Key Sentiment Trigger |
| Persistent Systems | -3.2% | High exposure to software engineering & R&D. |
| Infosys | -2.8% | Fears of AI cannibalizing application maintenance. |
| Coforge | -2.9% | Mid-cap vulnerability to automated knowledge work. |
| Tech Mahindra | -2.7% | Concerns over BPO/CRM automation. |
| TCS | -2.1% | Market cap fell as AI-led “disintermediation” fears rose. |
The “Sonnet Shock”: Why This Release Hit Harder
While previous AI updates were seen as “copilots,” Sonnet 4.6 is being viewed by analysts as a “replacement” for entry-to-mid-level IT service functions.
- Autonomous Agentic Planning: Unlike prior models, Sonnet 4.6 can navigate complex spreadsheets and multi-step web forms with a 72.5% success rate on OSWorld benchmarks (up from 14.9% in version 3.5).
- The Coding Threat: The model scored 79.6% on SWE-bench Verified, directly threatening the “Application Development & Maintenance” (ADM) revenue stream, which accounts for 40-70% of revenue for major Indian IT firms.
- 1 Million Token Context: The ability to “read” an entire enterprise codebase in one go reduces the need for large teams of human developers to map out legacy system transitions.
Also read, Why IT Stocks Are Falling Today — Clear Reasons Explained
Institutional Outlook: Disruption vs. Adaptation
Financial analysts are divided on whether this is a “SaaSpocalypse” or a buying opportunity.
The Bear Case (Jefferies/Motilal Oswal): “The client will likely pocket the productivity gains.” Estimates suggest 9-12% of sector revenue could be at risk over the next 3-4 years as AI shortens project timelines and lowers workforce requirements.
The Bull Case (JPMorgan/HSBC): Analysts argue the “AI scare trade” is overdone. They maintain that AI will not be a “magic box” for enterprises but will require massive modernization and integration services—tasks that companies like TCS (currently generating $1.8B in AI-led revenue) are uniquely positioned to handle.
Technical Indicators to Watch
- Nifty IT Support: The index has shed nearly 15% in February alone, currently testing its 200-day Moving Average. A failure to hold 32,000 could signal further structural de-rating.
- Valuation Compression: Historically, IT stocks traded at high P/E multiples due to “sticky” recurring revenue. Investors are now questioning these multiples as “moats” are tested by AI-led automation.
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