Global Tech Sell-Off Triggers Sharp Decline in Indian Stock Markets
On Tuesday, Dalal Street witnessed a significant downturn as investor sentiment was severely impacted by a widespread sell-off in technology stocks across global markets. The benchmark Sensex plummeted by 1,069 points, representing a decline of 1.3%, to close at 82,226 points. This sharp drop was primarily fueled by growing apprehensions that artificial intelligence (AI) models could disrupt the established business models of major IT companies, including Indian industry leaders such as TCS, Infosys, and Wipro.
IT Sector Bears the Brunt of the Sell-Off
The technology sector experienced the most severe impact, with the BSE IT index crashing by 4.5%. Key contributors to this decline included Infosys, which fell by 3.9%, TCS, down by 3.8%, HCL Tech, which dropped 6.1%, and Tech Mahindra, plunging 6.6%. Global players like IBM and Accenture also faced similar pressures, highlighting the widespread nature of the sell-off. The session began on a weak note, influenced by sharp losses in US markets on Monday night, and the Sensex opened over 200 points down, continuing to slide throughout the day before closing slightly above the day's low of 81,935 points.
Nifty Follows Suit Amid Broader Market Concerns
On the National Stock Exchange (NSE), the Nifty index mirrored the downward trend, closing 288 points lower, a decline of 1.1%, at 25,425 points. According to Vinod Nair, Head of Research at Geojit Investments, the fall was driven by significant weakness in IT stocks, exacerbated by renewed global concerns over AI-driven disruptions and margin pressures for traditional service providers. "Global trade and tariff worries resurfaced as well, with additional pressure arising from US President Donald Trump's warnings on trade deals and reports of possible national security tariffs," Nair noted.
Geopolitical Tensions Add to Investor Anxiety
In addition to AI-related fears, escalating tensions between the US and Iran contributed to heightened risk aversion among investors. Reports of embassy staff evacuations and Iran's warnings of wider regional escalation intensified market volatility. This combination of factors led to a substantial erosion of investor wealth, with the day's slide reducing market capitalization by Rs 3.6 lakh crore, bringing BSE's total market cap to Rs 465.6 lakh crore. The sell-off underscores the interconnectedness of global markets and the sensitivity of Indian equities to international developments, particularly in the technology sector.
