Indian technology stocks experienced a sharp downturn, with the IT sub-index facing its most significant drop since May 2022. This sell-off was triggered by the launch of new AI tools by Anthropic, raising concerns about automation's impact on the data and professional services sectors. Persistent Systems saw a 7% decline, while major players like TCS and Infosys also suffered substantial losses.

The market reacted negatively to Anthropic's new Claude Cowork agent, which automates tasks across various industries. This sparked a sell-off in U.S. and European data analytics and software companies, which quickly spread to the Indian market. Investors are worried about the potential for job displacement and reduced demand for traditional IT services due to these advancements.

The sell-off reflects growing anxieties about how artificial intelligence will reshape the IT landscape. Companies like TCS and Infosys, which rely heavily on providing services like data analysis and software development, are particularly vulnerable. The market will be watching to see how these firms adapt their business models and workforces to compete with AI-driven automation.