Shares of Infosys, the country’s second-largest software maker, are on track to post their worst monthly performance in over a decade amid investor concerns over disruptions linked to artificial intelligence. The sell-off is not limited to Infosys; other tech majors have also seen their stocks melt heavily on exchanges, erasing billions from their market value.
Amid sustained selling pressure, Infosys stock has lost 20.34% of its value in February, slipping to ₹1,308 apiece, marking its biggest monthly drop since April 2013, when it plunged 22.75%, and has also contributed to a 26.3% decline from the 52-week high of ₹1,775 apiece, placing it among the worst performers in the large-cap space.
The sharp decline has wiped out ₹1,33,824 crore from the company’s market capitalisation. At its peak, the company was valued at ₹8.37 lakh crore. The steep fall in the stock has also inflicted significant losses on domestic mutual funds, one of the key investor segments.
Domestic fund houses take a sizeable hit
At the end of the December quarter, 45 mutual funds collectively owned a 22.12% stake in Infosys, 2.07 percentage points higher than in the same period last year. The 26.3% fall in the Infosys share price from its one-year high of ₹1,775 has resulted in a notional loss of ₹41,892 crore for domestic fund houses.
The value of their holdings has declined to ₹1,17,331 crore from ₹1,59,223 crore, when the stock was trading at ₹1,775.
Some of the key mutual funds holding stakes in the company include SBI Mutual Fund (4.66%), ICICI Prudential Mutual Fund (4.11%), and HDFC Mutual Fund and UTI Mutual Fund (1.86% and 1.81%, respectively) at the end of Q2 FY26.
Apart from mutual funds, FIIs hold a majority stake of 30.3%, while general shareholders own a 13.7% stake in the company, Trendlyne data showed.
AI disruption fears trigger 19% crash in Nifty IT
February has been one of the worst months for the tech sector, as Dalal Street investors rushed to dump stocks without pause amid the emergence of the latest, more advanced AI tools, especially from startups like Anthropic.
This has led the Street to worry that these powerful innovations could disrupt India’s roughly $300-billion IT services industry, which is also labour-intensive.
In addition to market jitters, brokerages warn that the Indian IT sector could face further pressure if AI starts to eat into application services revenue, which typically accounts for 40% to 70% of total revenue for these companies.
After a four-month winning run, IT stocks started the month on an optimistic note, but that soon turned into panic selling following the unveiling of Claude Cowork Agent by Anthropic and its new product rollouts, along with a report from Citrini Research, which amplified concerns about companies vulnerable to the growing influence of artificial intelligence.
Consequently, the Nifty IT index dropped 19.13% this month and, at its low, crashed 21.45%, slipping to its lowest level since November 2023.
FPI selling intensifies
Concerns over Indian IT companies have also accelerated foreign selling in the sector so far in 2026.
Although FPIs turned bullish on the Indian stock market in February, they dumped ₹11,000 crore worth of IT stocks in the first half of February, taking their combined investments in IT stocks to ₹4,48,938 crore as of 15 February 2026 — the lowest level in four years, as per NSDL data.
At the end of January, FPI investments in domestic tech stocks stood at ₹5,33,953 crore. AI-related concerns, coupled with a weak outlook from top global brokerage firms, appear to have dented overseas investor sentiment.
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