Explained: Why Infosys, Wipro ADRs fell up to 10% overnight

Shares of Indian IT majors Infosys and Wipro, listed in the US as American Depository Receipts, fell up to 10% in overnight trade amid a global AI-led tech selloff.

Infosys ADR declined 9.8% on US exchanges, while Wipro ADR dropped 4.6% on the NYSE.

The weakness followed an AI product launch by Anthropic last week, which triggered a sharp selloff in global enterprise software stocks, erasing nearly $1 trillion in market capitalisation.

The pressure is expected to persist as investors reassess the disruption risk from AI.

The tremors were visible in domestic markets as well. The Nifty IT index has fallen 14.1% over the past week, wiping out $52 billion in market value.

Data compiled by CNBC-TV18 shows the IT sector's weight in the Nifty50 has dropped to 9.2% from 10.8% at the start of the month.

Brokerage views remain divided

While most analysts acknowledge the broader disruption risk AI poses to traditional IT services revenues, views differ on the scale and pace of impact.

"Unlike the move to the Cloud, which was largely a lift-and-shift transition that created significant incremental work for Indian IT services firms, the shift to AI presents a different set of challenges. Since the Cloud era, Indian IT has nearly doubled in size and is now the dominant incumbent rather than a challenger. While Cloud transformation primarily impacted infrastructure, AI’s impact is far more pervasive across services. Moreover, new AI-led revenue streams remain small and exploratory at this stage and are unlikely to fully offset potential disruption to traditional services work," Citi said in a note.

HSBC, however, offers a counterpoint. The brokerage believes LLM-driven AI products are unlikely to materially displace SaaS platforms, citing that there are virtually no examples yet of Fortune 500 companies replacing core enterprise systems with standalone AI models. It also argues that decades of embedded business context in platforms such as SAP and Salesforce continue to act as a strong moat.

For IT services, HSBC says the bigger issue is improving coding productivity. It estimates industry-wide productivity gains of around 8-10% at the revenue level. The recent launch of Claude Opus 4.6 is estimated to have added another roughly 500 basis points of improvement in coding productivity.

While this incremental efficiency could increase deflationary pressure on pricing, HSBC does not see the impact as materially significant at this stage.

To sum up, the brokerage acknowledges that risks this time may be more credible than in past tech cycles, but it still expects low-teens returns from the IT sector in 2026.

On February 12, the Nifty IT index slumped as much as 5.5%, marking its second sharp fall this month.

Among frontline stocks, TCS fell up to 5.5% to its lowest level since December 2020, while Infosys declined nearly 6% to close at ₹1,386 on the NSE, its lowest since November 2023.

HCL Technologies, which has about a 1.3% weight in the Nifty50, slid 5%. Tech Mahindra and Wipro declined 6% and 5%, respectively. The benchmark Nifty50 ended 0.60% lower at 25,807.20.