Last Updated:February 13, 2026, 10:52 IST

Jane Street operates trading subsidiaries in India and also manages offshore funds in Hong Kong and Singapore that are registered as FPIs

Jane Street Case

New York-based trading firm Jane Street has moved the Supreme Court of India amid a dispute with Indian tax authorities over the scope of legal privilege for certain internal communications, according to an Economic Times report on Friday.

The private quantitative trading firm, currently under scrutiny from both the Income Tax Department and capital markets regulator SEBI, has filed a review petition seeking judicial clarity on what constitutes “legal privilege.”

The case could have wider implications for Jane Street’s operations in India as well as for other corporate entities navigating the boundaries of privileged legal communications.

The Economic Times noted that the plea has reignited debate over whether confidential legal advice—including guidance from in-house legal teams acting in a legal advisory capacity—is protected under the Bharatiya Sakshya Adhiniyam, 2023, which replaced provisions of the Indian Evidence Act, 1872.

The filing is reportedly linked to enquiries by the Income Tax Department, which sought access to certain internal emails of Jane Street’s overseas operations as part of its investigation.

Jane Street operates trading subsidiaries in India and manages offshore funds in Hong Kong and Singapore, which are registered as foreign portfolio investors (FPIs) with SEBI.

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Last Updated:February 13, 2026, 10:28 IST

The Nifty IT index plunges nearly 5% in early trade on February 13, with heavyweights such as Infosys, Tata Consultancy Services, Wipro and HCLTech leading the fall.

Know Why IT Are Stocks Falling.

Why Are IT Stocks Falling? Indian IT stocks extended their sharp decline for a second straight session on Friday, tracking global weakness in technology shares and mounting concerns that rapid advances in artificial intelligence could disrupt the traditional business models of software exporters.

The Nifty IT index plunged nearly 5% in early trade on February 13, with heavyweights such as Infosys, Tata Consultancy Services, Wipro and HCLTech leading the fall. The sell-off mirrored weakness in US technology stocks overnight, where Apple dropped nearly 5%, Meta fell 2.82%, Nvidia declined 1.61% and Tesla slipped 2.69%. American Depository Receipts of Indian IT firms, including Infosys and Wipro, also slid as much as 9%, signalling negative sentiment ahead of domestic trading.

On the day, Infosys tumbled 6.2%, TCS fell 4.84% to a fresh 52-week low of ₹2,620, HCLTech declined 4.85% and Wipro lost 3.7%. Mid-cap names also saw broad-based selling: Persistent Systems dropped 3%, Coforge fell 5.32%, KPIT Technologies slumped nearly 8%, and Tech Mahindra declined 3.55%.

Why Are IT Stocks Falling?

Market participants say the sector is facing a rare combination of structural disruption and macroeconomic headwinds.

Agentic AI fears: The launch of advanced artificial intelligence systems capable of executing entire workflows — not just assisting coders — has intensified concerns about “seat compression”, or reduced staffing needs. Since Indian IT firms traditionally earn revenue based on billing hours and manpower, automation threatens the very foundation of their pricing model. Recently, Anthropic’s Claud Cowork sent shockwaves to the global IT industry. A new tool from AI company Algorhythm Holdings has also made trucking companies the latest victim of the market’s AI jitters.

Billing model transition: According to analysts, clients might move from time-and-material contracts to outcome-based pricing. While this could improve efficiency in the long term, markets worry that the transition phase may temporarily dent revenues as tech companies recalibrate pricing structures.

Valuation correction: After a strong rally in late 2025 driven by AI optimism, many IT stocks were trading at elevated valuations. The current risk-off environment is triggering profit-booking, especially in companies lacking a clear near-term AI monetisation roadmap.

Global tech layoffs: More than 80,000 tech employees were reportedly laid off globally in the first 40 days of 2026, including at large firms such as Amazon and Salesforce. Investors see this not as routine cost-cutting but as a structural shift toward automation and AI-driven efficiency.

What Analysts Are Saying

Strategists at JPMorgan said in a recent note that the sharp correction in software stocks may be excessive and driven more by fear than by actual deterioration in business fundamentals. According to the brokerage, markets appear to be pricing in AI-led disruption at unrealistic levels, which could create room for a rebound.

Vinod Nair, Head of Research at Geojit Investments, said AI is triggering a structural transformation in Indian IT services by compressing timelines and automating routine tasks. “Layoffs are likely in routine-heavy areas as fewer people will be needed to deliver the same outcomes. Clients are shifting toward outcome-based pricing, and in the coming quarters AI adoption could create headwinds for deal wins, potentially impacting topline. Monitoring deal flow will be critical,” he said.

Kenneth Andrade, CIO at Old Bridge Mutual Fund, noted that sector-wide profit surges are unlikely going forward. Growth is becoming company-specific as market share shifts and structural challenges reshape valuations. “It’s no longer a broad play — only a select company or two truly makes sense in this climate,” he said.

What Should Investors Do Now?

Market strategists say selectivity is key. JPMorgan’s strategy team believes the risk-reward balance is gradually tilting toward recovery, given bearish positioning and still-solid fundamentals. They recommend increasing exposure to high-quality software companies that are better positioned to adapt to AI-driven changes.

For investors, the message is clear: the sector is undergoing a structural transition rather than a cyclical slowdown. Near-term volatility may persist, but long-term winners are likely to be firms that successfully pivot from manpower-driven outsourcing to AI-enabled, outcome-focused technology services.

Not the First Time the Tech Sector Has Faced Disruption Fears

The IT industry has historically gone through phases of panic during technological transitions.

Y2K era (late 1990s): Fears that computer systems would crash at the turn of the millennium triggered massive global spending to fix legacy code. While markets were volatile, the demand surge ultimately helped Indian IT firms scale globally and build their reputation.

Outsourcing wave (mid-2000s): Western economies feared job losses to low-cost destinations such as India and the Philippines. Although it caused short-term disruptions and wage pressure, outsourcing ended up expanding the global tech ecosystem and creating new categories of jobs.

Both episodes show that technological shifts often cause short-term market pain but can expand the industry’s long-term opportunity set.

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Pakistan’s startup ecosystem, once a headline-grabbing post-Covid-19 success story that attracted aggressive venture capital chasing growth and buzzworthy “disruption,” is now entering a more cautious and structurally different phase.

With investors increasingly prioritising risk-adjusted returns and shifting capital towards safer assets such as gold, the funding landscape is undergoing a transformation marked by a decisive move away from speculative equity rounds towards hybrid financing structures that now dominate capital flows.

The shift was highlighted during Invest2Innovate (i2i)’s “Ecosystem Signals 2026” event, where industry leaders discussed the findings of Pakistan’s Capital Landscape Brief 2024-2025 and outlined emerging investment trends shaping the ecosystem. Aleena Khan, Deputy Director Growth & Strategy at i2i, highlighted that total startup funding doubled to $74 million in 2025 from $34 million in 2024, while deal activity also increased from eight deals to 16 deals. However, the nature of capital changed significantly as hybrid financing, combining equity with debt, surged dramatically and accounted for nearly 89% of all capital raised in 2025, underscoring a structural shift in investor behaviour rather than a broad-based revival in venture capital.

During the period under review, hybrid financing surged from just $1 million in 2024 to $66 million in 2025, representing 89% of total capital. Misbah Naqvi, an early-stage investor, noted that Pakistan’s evolving funding environment reflects broader trends across emerging markets. “Pakistan’s landscape has changed, but many of these changes are not unique to Pakistan,” she said, adding that investors globally are adopting diversified financing mechanisms to manage risk exposure.

Naqvi highlighted that Pakistan already has venture debt criteria and instruments that founders can utilise, providing alternative financing channels beyond traditional equity rounds. However, she cautioned that the ecosystem remains incomplete without successful exits. “A full venture cycle has not yet been completed, as meaningful exits have not been seen within the startup ecosystem,” she said, emphasising that exits are critical for recycling capital and strengthening long-term investor confidence. The report noted that the funding recovery was not driven by a revival in traditional venture capital equity rounds, which remained subdued, but instead reflected founders’ growing reliance on diversified capital structures amid cautious investor sentiment and tighter risk appetite.

Analysts highlighted that hybrid structures offered investors downside protection while enabling startups to secure growth capital without heavy dilution, marking a structural evolution in Pakistan’s startup financing landscape. Despite the rebound, equity funding continued to contract, signalling that investor confidence in high-risk early-stage ventures remains fragile. The briefing suggested that whether equity markets recover or hybrid financing continues to dominate will be a key trend to watch in 2026.

Experts cautioned that while diversified funding channels improved capital access, long-term ecosystem sustainability will depend on restoring balanced capital flows across equity, debt and alternative financing instruments. Panellists also underscored a fundamental shift in venture capital philosophy heading into 2026. Kasra Zunnaiyyer, Co-Founder of logistics platform Trukkr, said investors have moved decisively away from funding speculative ideas and are now demanding capital efficiency, proven business models and measurable performance metrics.

There is a growing focus on service-based startups offering must-have solutions with strong financial sustainability, Zunnaiyyer said, noting that founders must demonstrate profitability pathways and robust unit economics before seeking additional capital. He added that AI-enabled service companies are becoming particularly attractive to investors because they can scale efficiently, automate operations and deliver personalised services with reduced labour intensity.

Omer Bin Ahsan, founder and CEO of fintech firm Haball, emphasised the broader macro-financial context influencing capital flows. He said capital naturally avoids environments perceived as unstable or high-risk, saying “capital is coward,” but pointed out that Pakistan currently has surplus liquidity within the private sector as government borrowing requirements have moderated compared to previous years. “This surplus provides an opportunity for the local banking system to lend to startups,” he said.