D-St rout wipes out ₹5 trillion in M-cap amid AI fears, tariff tensions

The market capitalisation of companies listed on the BSE plunged by over ₹5 trillion on Tuesday, weighed down primarily by technology stocks and renewed tariff tensions.

 

The market cap of BSE-listed stocks fell by ₹5.16 trillion to ₹468.52 trillion with the benchmark indices falling over 1 per cent. The Nifty50 index fell as much as 385.4 points, or 1.5 per cent, to 25,327.6, while the 30-stock Sensex tumbled 1,359.3 points or 1.63 per cent, to 81,934.7. 

 

As of 2 PM, the Nifty 50 was trading 1.19 per cent or 306.90 points down at 25,407.25, and the Sensex was trading 1.32 per cent or 1095.34 points down at 82,199.32. In the broader markets, the Nifty Midcap 100 and Nifty Smallcap 100 also traded in the red with a cut of 0.83 per cent and 1 per cent, respectively. 

 

Meanwhile, the Nifty IT index tumbled to a 2-year low, with the index falling over 5 per cent. The selling came after a report by Citrini Research outlined a scenario where Indian tech majors may see contract cancellations accelerating through 2027 as the marginal cost of AI coding agent collapses. 

 

The sell-off has also been compounded by weakness in US tech stocks and renewed uncertainty around enterprise tech spending, Harshal Dasani, Business Head, INVAsset PMS, said.  "Technically, the index is deeply oversold, but sentiment will stabilise only when clarity emerges on deal pipelines, pricing power, and how Indian IT firms reposition themselves in an AI-first environment."

 

Adding to the caution, US President Donald Trump’s new 10 per cent global tariffs came into effect on Tuesday, after the Supreme Court judgment ruling the reciprocal tariff os illegal. Reports indicate that the White House is working on a formal order to raise the global tariff rate to 15 per cent. The lack of clarity from the US has fuelled uncertainty worldwide, weighing on investor sentiment.

 

Business Standard earlier reported that India postponed the visit to Washington DC amid the uncertainty surrounding the tariff situation. 

 

Amid ongoing global uncertainties and heightened volatility, traders should adopt a cautious and selective approach, prioritising fundamentally strong stocks, especially during market dips, Sumeet Bagadia, Executive Director at Choice Broking, said. "Avoid aggressive positioning at current levels. A fresh buying opportunity may emerge only after a decisive and sustained breakout above the 26,000 mark on the Nifty."

 

Geopolitical tensions also added to the uncertainty amid US-Iran tensions, ahead of the talks between the two countries on a possible nuclear deal, which will take place on Thursday, February 26, in Geneva.

 

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(Disclaimer: The views and investment tips expressed by the analysts in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)