IT rout drags Indian markets lower on AI disruption fears
IT rout drags Indian markets lower on AI disruption fears
Indian IT shares lead a broad sell-off as AI disruption fears in the US spur concerns of automation-driven job losses, pulling indices down and wiping out market value.
Mumbai: Indian equity gauges slid 1.3% on Friday as IT stocks led a sharp sell-off sparked by fears that AI-driven disruptions in the US economy could hasten job losses and upend outsourcing models. The NSE Nifty fell 336.10 points to 25,471.10, while the BSE Sensex dropped 1,048.16 points to end at 82,626.76. Both indices ended the week with losses of up to 1.1%.
The Nifty IT index tumbled as much as 5.2% intraday and finished 1.4% lower for the day, taking its weekly decline to more than 8% — the steepest weekly drop in 10 months. The selloff wiped out ₹4.69 lakh crore in market value from the IT pack during the week. "The weakness in the US markets due to the sharp declines in IT stocks cascaded to other sectors such as metals, as investors rushed to book profits from overheated stocks," said Ajit Mishra, SVP Research, Religare Broking.
Foreign portfolio investors were net sellers of ₹7,395 crore, while domestic institutions bought ₹5,554 crore. In February so far, global investors have purchased equities worth ₹10,734 crore, after selling more than ₹34,000 crore in January. On Thursday, the Nasdaq Composite fell about 2%, pressured by similar worries over AI disruptions. In Asia on Friday, Hong Kong fell 1.7%, China and Japan shed 1.3% and 1.2% respectively, while Taiwan gained 1.6%.
At home, the broader market took a beating with the Nifty Mid-cap 150 and Small-cap 250 indices slipping around 1.6% each. Despite the recent stock sell-off, Indian IT firms are adapting to new AI models, investing in AI training and partnerships, and pursuing strong deal wins, which analysts say could salvage long-term earnings prospects amid a volatile backdrop.
