Infosys, TCS and other IT stocks in focus after Nasdaq rally on Friday

IT stocks such as Infosys, TCS, among others are in focus on Monday, February 9, as they may react to the Nasdaq rally on Friday.

The Nasdaq Composite index ended the previous session 2.18% higher at 23,032.21, its biggest single-day gain since November. Investors bought US tech shares, particularly semiconductors, on Friday. In the previous three sessions, tech shares had sold off massively on concerns regarding expenditure and competition disruption with regards to the AI boom.

Following suit, Nifty IT stocks declined between 4%-8% in the past week, with Infosys, TCS leading losses.

Last week, US IT stocks began their sell-off on Wall Street after a new tool dropped by Anthropic, regarding legal briefs, led to a $300 billion wipeout in market capitalisation of software stocks.

The development added to the already bearish sentiment around software stocks due to perceived threats to their business models post AI.

The sentiment around software stocks had become so bearish, Jefferies called it a "SaaSpocalypse". It said the trading activity around these had a "get me out" type selling.

Last week, Jefferies in its note said Anthropic's co-work plug-in and Palantir's claims of faster SAP migrations showcase how AI could potentially erode application service revenues for IT firms. As application services comprise 40-70% of the overall topline, IT firms face growth pressures, Jefferies stated.

Meanwhile, Citi said it remained cautious on the entire IT sector.

The Nifty IT index ended the previous trade session 1.47% lower, with all 10 of its constituents declining 1%-3.55%.

Coforge, Oracle Financial Services Software Ltd., Persistent Systems, LTIMindtree and

MPhasis were the top Nifty IT losers. It is now to be seen if IT stocks will take cues from Friday night's Nasdaq rally.

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