Sensex, Nifty Slide Up to 1.5% As IT Stocks Tumble; AI Fears And Rising Crude Weigh On Markets

Indian stock markets witnessed a sharp fall on Tuesday, with both benchmark indices ending deep in the red. Selling pressure in information technology (IT) shares, rising crude oil prices and weak global signals weighed heavily on investor sentiment.

By 1:40 pm, the Sensex had dropped 1,221.99 points or 1.47% to 82,072.67. The Nifty was down 337.55 points or 1.31% at 25,375.45.

Market breadth clearly favoured the bears. Nearly 2,800 shares declined on the exchanges, while less than 1,000 advanced, indicating broad-based weakness.

IT Stocks Lead the Fall

The biggest drag on the market came from IT stocks. The Nifty IT index slipped more than 5%, making it one of the worst-performing sectors of the day.

Among the major losers on the Nifty were:

HCL Technologies
Infosys
Eternal

These stocks fell as much as 4%, reflecting concerns about the future growth of the IT sector.

Why Are IT Stocks Under Pressure?

Fresh worries about artificial intelligence (AI) disrupting traditional software services triggered heavy selling. Reports suggested that AI tools are becoming more efficient in modernising legacy systems at lower costs.

For Indian IT companies, which earn a significant portion of their revenue from overseas clients, this raises questions about future demand and pricing power.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said that weakness in the US-listed shares (ADRs) of Indian IT firms indicates that the sector could remain under pressure in the near term.

Weak Global Cues Add to Nervousness

Global markets also failed to provide support.

US markets ended nearly 2% lower overnight after comments from Donald Trump created uncertainty over trade policies. He warned that countries stepping away from newly negotiated trade agreements could face higher tariffs under other trade laws.

This comes after the US Supreme Court struck down emergency tariffs, adding further uncertainty to global trade dynamics.

Asian markets remained mostly muted, reflecting cautious investor mood worldwide. Investors are now closely watching further policy signals from the United States and the European Union.

Rupee Weakens Against Dollar

The Indian rupee also slipped in early trade. It fell by 7 paise to 90.96 against the US dollar.

The decline was mainly due to:

Rising global crude oil prices
A stronger US dollar
Weak domestic equity markets
However, foreign institutional investor (FII) inflows helped limit the currency's fall.

A weaker rupee can increase import costs and add pressure to inflation, which may affect overall market sentiment.

Crude Oil Prices Rise

Brent crude, the global oil benchmark, rose about 1% to USD 72.13 per barrel.
Higher crude prices are a concern for India because the country imports most of its oil.

Rising oil prices can:

Increase the trade deficit
Raise fuel and transport costs
Push inflation higher
All these factors can negatively impact corporate earnings and investor confidence.

Volatility Due to Weekly Expiry

Tuesday also marked the weekly expiry of Nifty derivatives contracts. On such days, traders close or roll over their futures and options positions.
This often leads to sharp intraday swings and higher volatility, which may have added to the day's market fluctuations.

Other Sectors Also in Red

The weakness was not limited to IT stocks. All sectoral indices on the NSE were trading in the red. Realty, auto and mid-cap stocks also saw selling pressure.
The Nifty Midcap100 and Nifty Smallcap100 indices fell up to 1%, showing that the broader market was also affected.

However, a few stocks such as Power Grid Corporation of India and Asian Paints managed to stay in positive territory, offering limited support.