IT Stocks Plunge: Infosys, HCLTech Lead Decline Amid AI Disruption Fears; Jefferies Warns of 'More Pain'

• IT stocks, including Infosys and HCLTech, extended their decline for a second consecutive session on February 5.
• The Nifty IT index fell nearly 1 percent, marking a 7 percent drop in two sessions, the biggest since March 2020.
• The fall is attributed to concerns that Anthropic's new legal AI tool will intensify competition and disrupt traditional IT services.
• Jefferies warns of "more pain ahead" for the sector, as AI could erode application services revenue, which forms a significant portion of IT firms' topline.
• Analysts suggest AI will drag on IT firms' revenue growth for the next 1-2 years, outweighing emerging AI-led opportunities.