Markets slide nearly 1% as AI fears and tariff worries hit IT stocks

Sensex and Nifty fell sharply on renewed AI-driven IT sell-offs, tariff uncertainty and rising crude prices, with the Nifty IT index down 21% this month - its worst run in 23 years

Domestic benchmark indices fell over a per cent on Tuesday, dragged down by a sharp sell-off in information technology stocks amid renewed concerns over artificial intelligence (AI)-led disruption. The uncertainty around the US tariff regime and elevated crude oil prices also weighed on sentiment.

 

The benchmark Sensex closed 1,068.74 points, or 1.3 per cent, to end at 82,225.92, while the Nifty 50 declined 288.35 points, or 1.12 per cent, to settle at 25,425. Both indices hit deeper losses intraday, with the Sensex plunging 1,360 points at the day’s low to 81,935 and the Nifty slipping to 25,328.

 

IT stocks once again saw the maximum sell-off. The Nifty IT index slumped 4.7 per cent to 30,054, its lowest since August 3, 2023. The index is now down 21 per cent so far this month and is set to log its worst monthly performance in 23 years. On the other hand, the Nifty 50 index is largely unchanged on a month-to-date basis.

 

 

Large-cap IT majors such as TCS, Infosys, HCL Technologies and Wipro declined between 2.6 per cent and 5.8 per cent.

 

Overall market capitalisation fell ₹3.5 trillion to ₹465.6 trillion on Tuesday. Meanwhile, the IT pack shed ₹1.2 trillion in market value, extending this month’s mcap loss to ₹6.4 trillion.

 

The sell-off this month comes amid mounting concerns that rapid advances in AI could accelerate disruption in legacy software services businesses, weigh on growth and intensify pricing pressure. A latest report by Citrini Research further amplified fears around business models vulnerable to AI-led automation.

 

Beyond IT, broader market sentiment remained cautious. Over half of NSE sectoral indices ended in losses. Nifty Realty fell over 2.5 per cent, while the Nifty Auto index fell nearly half a per cent. Market participants said job losses in the IT industry could impact other pockets of the economy, particularly home and car sales.

 

Concerns over a global trade war have already kept investor sentiment fragile. US President Donald Trump warned countries against backing away from newly negotiated trade deals following a Supreme Court ruling that struck down emergency tariffs, indicating that higher duties could be imposed under alternative trade laws. India has reportedly delayed planned trade talks with the US, while China and the European Union have also signalled pushback against recent tariff developments.

 

Export-oriented stocks also came under selling pressure after the government halved benefits under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme. Textile exporters such as Gokaldas Exports, Welspun Living, Indo Count Industries and Arvind fell between 3.6 per cent and 5.6 per cent.

 

Rising crude oil prices further dampened sentiment. Brent crude climbed around 1 per cent to trade near its highest level in seven months as traders assessed the risks to supply amid rising tensions between the US and Iran. Goldman Sachs has raised its oil price forecasts for the last quarter of the calendar year due to low inventories in developed economies. Higher oil prices have stoked concerns over domestic inflation and a widening trade deficit.

 

Market breadth remained weak, with declining shares at 2,889 significantly outnumbering advancing shares at 1,344 on the BSE. Traders also pointed to weekly derivatives expiry adding to intraday volatility.

 

Analysts said near-term market direction would continue to hinge on developments around global trade policy, AI-related commentary impacting IT stocks, and crude price movements. 

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(with Reuters inputs)