Sensex Tumbles Over 1,000 Points as Global Tech Sell-Off Hits Indian Markets
In a sharp downturn, the Bombay Stock Exchange (BSE) Sensex plummeted by 1,048 points, or 1.25%, on Friday, closing at 82,627 points. This significant decline was fueled by across-the-board selling, exacerbated by a recent global sell-off in technology stocks, which has rattled investors worldwide.
Foreign Fund Outflows and Wall Street Influence Drive Losses
The selling pressure was primarily driven by foreign institutional investors (FIIs), who net sold stocks worth nearly Rs 7,400 crore, according to BSE data. This offloading followed an overnight sell-off on Wall Street, where analysts and market players have coined terms like "AI-unwinding trades" and "AI-scare trades" to describe the turmoil. The session on Dalal Street began on a weak note, with the Sensex down over 750 points at the open, and it remained in negative territory throughout the day before diving sharply near the close.
Domestic funds attempted to cushion the blow by net buying stocks worth Rs 5,554 crore, but their efforts were insufficient to arrest the slide in the indices. The day's losses left investors poorer by Rs 7 lakh crore, reducing BSE's market capitalisation to Rs 465.5 lakh crore, as per official data.
Key Contributors to the Decline and Sectoral Impact
Among Sensex stocks, HDFC Bank and Reliance Industries were the biggest contributors to the day's loss. The information technology (IT) sector faced particular pressure, with major players like TCS closing 2.2% lower, Infosys down 1.3%, and HCL Tech falling 1.4%. This dragged BSE's IT index down by 1.7%.
Siddhartha Khemka of Motilal Oswal Financial Services commented on the sector's challenges, stating, "The IT sector continues to face headwinds amid rising concerns that rapid AI advancements could disrupt traditional service models and weigh on future revenue visibility." This sentiment reflects broader anxieties about how artificial intelligence might reshape industry dynamics.
Broader Market Trends and Outlook
Of the 30 Sensex stocks, 28 closed in the red, with only Bajaj Finance and SBI managing gains. In the broader market, the advance-decline ratio was less skewed, with 1,253 advances compared to 2,960 declines, according to BSE data. This indicates that while large-cap stocks bore the brunt of the selling, mid- and small-cap segments showed some resilience.
The downturn underscores the interconnectedness of global markets, as fears over AI-driven disruptions and tech stock volatility in the United States spilled over into Indian equities. Investors are now closely monitoring further developments in AI trends and foreign fund flows to gauge market direction in the coming sessions.
