A gauge including Tata Consultancy Services Ltd. and Infosys Ltd. has shed $56 billion in combined market value since Anthropic PBC released a tool seen as a threat to their business models. The slide in Indian tech firms has stood out in Asia, a region whose large hardware industry is seen as indispensable to the AI ecosystem.

Analysts at HSBC Holdings Plc and JPMorgan Chase & Co. said worries may be overdone, as Indian IT firms stand to gain from more customers requiring help integrating artificial intelligence into their operations. Investors including PPFAS Mutual Fund say the sector will be able to flexibly respond to changes.

“Every time there’s a technological shift, IT companies have adapted, reskilled their staff and ensured client needs are being met,” said Raunak Onkar, research head and fund manager at $17 billion PPFAS, which added shares of Indian software makers to its portfolio last month. The companies have had success because they can quickly offer affordable knowhow, he added.

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The optimism shows how some investors are betting that the recent selloff in India’s software companies has the potential to reverse. Technology stocks have been roiled globally by worries over the impact of AI tools on businesses, particularly, those that are built on winning productivity gains for companies.

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The NSE Nifty IT Index has slumped 15% since Anthropic’s announcement earlier this month, on track for its worst month since March 2020. While software-heavy Chinese and Australian tech stocks have also been hit, losses have been a particular concern in the cohort that was seen as a flagbearer of India’s growth story.
The nation’s IT outsourcers rose to prominence in the late 1990s by helping Western companies solve the Y2K bug, which had threatened computer chaos at the turn of the millennium. Since then companies have survived fluctuations in global growth from a series of crises, as well as the dawns of new technologies from mobile telecommunications to cloud computing.Now the software business model is seen at risk of obsolescence from the rise of AI and robotics. But analysts like Stephen Bersey at HSBC see such views as “flawed and illogical.”

“To optimally unlock the potential of the ‘generated’ information that AI produces, software is needed to orchestrate the overall digital interactions between AI and non-AI system enterprise components,” he wrote in a note dated Feb. 9. “India based companies have had the ability to create and market enterprise class software for decades … at scale.”

Skeptics are particularly worried about the potential for AI’s productivity improvements to eat into earnings for IT outsourcers. For Phanisekhar Ponangi, co-founder of Mavenark Asset Managers Pvt., “the scare is real.”

“Over the last 30 years, IT businesses succeeded by saying they would improve productivity,” he said. The industry is set for a big change as AI compresses project timelines and reduces the number of workers needed, while “the client will pocket the productivity gains.”

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Others argue that the sector has seen what’s coming and is prepared. Companies are increasingly talking about AI on their earnings calls, and even disclosing related revenues. TCS in January said AI solutions now generate $1.8 billion in annualized revenue for the company and are growing at around 17% quarter-on-quarter.

Manu Rishi Guptha, a portfolio manager at MRG Capital, said the market is also overlooking two cushions for Indian IT firms: large cash piles that can fund shifts as AI disrupts business models, and a relatively young workforce that can adapt quickly.

The stock meltdown may actually be an “opportunity in disguise,” Guptha said, adding that the industry is seeing resilient order flows and share valuations have dropped. The Nifty IT gauge is trading at 20 times forward earnings estimates, the lowest level since April 2023.

The Food and Drug Administration announced a recall of one brand of farm-raised Atlantic salmon over potential listeria contamination.

One lot of Wellsley Farms Farm-Raised Atlantic Salmon was recalled last week, according to the FDA. The company, Slade Gorton & Co., initiated a recall of lot 3896.

The salmon was sold in 2-lb bags at BJ’s Wholesale Club stores in Delaware, Maryland, New Jersey, New York, North Carolina, Pennsylvania and Virginia from Jan. 31 through Feb. 7.

MORE THAN 191,000 AROEVE AIR PURIFIERS RECALLED OVER OVERHEATING, FIRE RISK

One lot of Wellsley Farms Farm-Raised Atlantic Salmon was recalled. (FDA)

The FDA said Listeria monocytogenes was discovered when the agency collected a random sample.

Slade Gorton & Co. said it is investigating how the contamination happened and that it is taking steps to prevent it from happening again.

JAGUAR LAND ROVER RECALLING 2,300 ELECTRIC VEHICLES IN US OVER FIRE RISK

The salmon was sold in 2-lb bags at BJ’s Wholesale Club stores. (Angus Mordant/Bloomberg via Getty Images / Getty Images)

Healthy people with a listeria infection may suffer short-term symptoms such as high fever, severe headache, stiffness, nausea, abdominal pain and diarrhea, the FDA said. Pregnant women could also face miscarriages and stillbirths.

The agency urged people with listeria symptoms to contact a health care provider. No illnesses have been reported thus far.

The FDA said Listeria monocytogenes was discovered when the agency collected a random sample. (iStock / iStock)

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BJ’s is alerting its members who may have purchased the recalled product.

Anyone who may have purchased the recalled product can contact the store for information on how to obtain a full refund and what to do with the remaining product.

When fear is widespread, valuations tend to compress. Strong companies with resilient business models, healthy balance sheets, and long-term growth prospects may be sold alongside weaker peers, not because their fundamentals have deteriorated, but because investors are reacting to macro uncertainty or short-term earnings pressure. The result is a broad-based discount offering a favorable risk-reward for those willing to look beyond the immediate gloom.

Templeton’s perspective also reflects the inherently cyclical nature of markets. Economic slowdowns, financial crises, and policy-tightening phases have repeatedly been followed by periods of recovery and expansion. History shows that markets often begin to rebound well before economic data improves or sentiment turns positive. By the time optimism returns and confidence is restored, a significant portion of the market rebound is often already behind investors.

Acting during periods of maximum pessimism, however, requires more than courage—it demands discipline and careful analysis. Not every falling stock is a bargain, and not every crisis leads to a swift recovery. Successfully applying Templeton’s philosophy involves distinguishing between temporary setbacks and permanent impairments. Investors must focus on balance sheet strength, cash flow sustainability, industry structure, and long-term demand drivers to ensure they are buying true value, not value traps.

The quote also highlights a behavioural edge. Most investors are psychologically wired to seek safety and validation from the crowd. Buying when others are fearful feels uncomfortable and often goes against prevailing narratives. Yet it is precisely this discomfort that creates opportunity. When pessimism is extreme, expectations are already very low, meaning even modest improvements in news flow or fundamentals can trigger sharp re-ratings in asset prices.

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In today’s fast-moving, headline-driven markets, pessimism can spread quickly through social media, 24-hour news cycles, and global risk-off events. This can amplify short-term volatility and deepen sell-offs, even when long-term business prospects remain intact. For long-term investors, these moments can provide rare opportunities to accumulate quality assets at attractive valuations.
Sir John Templeton’s wisdom serves as a reminder that successful investing often involves acting opposite to prevailing emotion. While it is never easy to buy amid fear and uncertainty, history shows that some of the most rewarding investments are made when pessimism is at its peak. For investors with patience, rigorous analysis, and a long-term perspective, moments of maximum pessimism can become the foundation for future returns.

Oil advanced from Friday’s close, with West Texas Intermediate trading near $64 a barrel, with no settlement on Monday because of a US holiday. Brent rose more than 1% on Monday to close below $69. President Donald Trump said he will be indirectly involved in the talks. Iran wants to make a deal, he said.

Asian stocks posted a modest gain on Tuesday as holiday-thinned trading kept volumes light, with investors looking ahead to a fresh batch of economic data later this week for direction.

Mainland China and Hong Kong are shut for Lunar New Year holidays and US markets will return Tuesday after observing the Presidents’ Day holiday on Monday. The yen fluctuated.

The US rate path remains in focus following the slower-than-expected inflation print on Friday as traders fully priced a Fed cut in July and the strong chance of a move in June. Investors are also paying attention to the shifts in sentiment around artificial intelligence, which may reverberate far beyond the technology sector with the emergence of the so-called AI scare trade.

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“The backdrop for equities is positive post CPI,” said Andrea Gabellone, head of global equities at KBC Securities. At the same time, there could be “more dispersion ahead as sentiment around key AI-exposed sectors is still very critical,” he added.
In the US on Tuesday, Fed Governor Michael Barr will speak on the labor market and AI, while San Francisco Fed President Mary Daly speaks on AI and the economy. Traders will also be watching for ADP private payrolls numbers on Tuesday and the minutes from the Fed’s January meeting on Wednesday for a fresh read on the economy.Cash trading in Treasuries resumed Tuesday after bonds rallied on Friday in reaction to the benign US inflation data.

Treasury two-year yields were little changed after closing at the lowest level since 2022 on Friday. That came as traders priced in higher chances the Fed will slash rates more than twice this year. Yields on the benchmark 10-year stood at 4.04%.

In Japan, the central bank governor said Prime Minister Sanae Takaichi made no specific requests during a regular meeting to discuss the economy and swap general ideas.

Investors and economists are trying to gauge whether an emboldened Takaichi will try to slow down the central bank’s path of interest hikes to protect economic growth or if she will instead encourage the BOJ to act to help support the yen.