Feb 12 (Reuters) - Indian shares fell on Thursday, with information technology shares hovering near a 10-month low, on concerns over artificial intelligence disruption while fading expectations of a near-term U.S. rate cut also weighed.

Rapid advances in AI, triggered in part by Anthropic's latest automation push, have fuelled fears of AI-driven automation disrupting Indian IT's labour-intensive business model.

The IT index fell 5.5% on the day, the biggest decline in percentage terms among 16 sub-indexes. It has declined 12.5% so far in 2026 after losing 12.6% last year.

"There is no denying the fact that AI could effectively address the problems that Indian IT was solving collectively," said Tarun Singh, founder and managing director of Highbrow Securities, adding that AI shocks will have to be absorbed as Indian IT is a big outsourcing market.

Stronger-than-expected January U.S. jobs data, which dented near-term rate cut expectations, also weighed.

The tech-heavy Nasdaq Composite fell 0.2% overnight, with a sharp drop in software stocks from AI-led disruption, while hardware and chip stocks such as Samsung Electronics and SK Hynix pushed Asian shares to record highs. [.N] [MKTS/GLOB]

On the day, the Nifty 50 fell 0.57% to 25,807.2 and the BSE Sensex shed 0.66% to 83,674.92. Twelve of the 16 sectors logged losses.

The broader small-caps and mid-caps lost 0.6% and 0.5%, respectively.

The declines come even as sentiment broadly improved earlier this week, after India and the U.S. unveiled an interim framework, while India and the European Union finalised a landmark trade deal in January.

The Nifty had gained 1.2% in the last four sessions.

While the two deals lent a semblance of stability to markets, there is very little room for disappointment when it comes to earnings, said Singh.

Profit growth of India's Nifty 50 companies is expected to remain in single digits in the December quarter, with several companies across sectors having taken a one-time hit due to the government's revamped labour codes.

Consumer goods major Hindustan Unilever slid 2.2% on the day on a profit drop.

(Reporting by Vivek Kumar M and Bharath Rajeswaran; Editing by Rashmi Aich and Janane Venkatraman)

By Bharath Rajeswaran and Vivek Kumar M