Shares of Indian IT companies fell sharply on February 12, tracking losses in US technology stocks. The Nifty IT index dropped more than 4 per cent to 33,588.80 in early trade, making it the worst-performing sector of the day. Infosys shares fell around 5 per cent and hit their lowest level since April 17 last year. Coforge also dropped about 5 per cent.TCS, Tech Mahindra, Mphasis, LTI Mindtree and Persistent Systems declined over 4 per cent each, while HCL Technologies and Wipro slipped more than 3 per cent.

The decline came after the latest US jobs report showed that job growth rose in January and unemployment fell to 4.3 per cent. Normally, strong job data signals a healthy economy. But in this case, investors are worried that the US Federal Reserve may delay interest rate cuts if the economy remains strong.

Higher interest rates are usually negative for IT companies like Infosys because they earn a large part of their revenue from the US. When rates stay high, businesses cut spending on technology and outsourcing.

However, economists pointed out that most of the new jobs were added in the healthcare sector.

"The only jobs being filled in January are in health care and social assistance, along with some nonresidential specialty trade contractors probably related to AI facilities, all of which do not guarantee the economy's future success," Christopher Rupkey, chief economist at FWDBONDS, told Reuters.

"If you are looking for a job ... you are unlikely to find anything to apply for in today's report,” he added.

After the US jobs data, major technology stocks in the US also declined. Microsoft fell 2.2 per cent, while Alphabet dropped 2.4 per cent. The S&P 500 software index fell 2.6 per cent.

Indian IT stocks often move in line with US tech companies because they depend heavily on American clients.

Another reason for the fall is growing concerns about artificial intelligence (AI). Investors worry that new AI tools could increase competition for traditional IT services companies.

Recently, AI company Anthropic launched new tools for its Claude AI chatbot that can automate tasks in legal, sales, marketing and data analysis. This has raised concerns that AI could disrupt parts of the IT and outsourcing industry.

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