US job growth rose in January, signaling a strong labor market. This may stop the Federal Reserve from cutting interest rates soon. Lower rates usually boost demand, but strong jobs data suggest otherwise. Investors are mainly worried about AI advances affecting IT companies. Sumit Pokharna, Vice-President at Kotak Securities, said, "Rapid developments in AI have created uncertainty among investors, which is weighing on sentiment for traditional IT stocks." On February 4, the Nifty IT index dropped 5.9% after Anthropic, a San Francisco AI firm, launched Claude Cowork — an open-source AI plugin to automate legal, sales, marketing, and data tasks. This caused a huge ₹1.9 lakh crore loss in Indian IT market value in one day. Vikas Gupta, CEO at OmniScience Capital, said the industry knows AI’s potential but Anthropic’s product highlighted its disruptive power. He warned, "Even as demand for digital services rises and AI investments may reach $2-3 trillion over five years, IT services won't be disrupted overnight." Gupta added that IT companies will now focus on helping non-tech firms adopt AI, but this shift needs time and makes growth uncertain. He noted that Indian IT stocks trade at 20-30 times price-to-earnings (P/E), despite low near-term growth of 2-4%. "Even after this correction, we remain cautious until valuations become more attractive," he said. Pokharna sees valuations improving soon and remains hopeful about the sector’s medium- to long-term future. "The recent sell-off may be overdone, as not all tech expectations happen immediately, and Indian IT firms will adapt," he said. Rajesh Palviya, Axis Securities’ head of technical and derivatives research, reported a rise in bearish bets on large- and mid-cap IT stocks amid the drop. The Nifty IT index closed at 33,160 on Thursday, near key support levels.