Indian equities ended sharply lower on Thursday, dragged down by a fresh wave of selling in information technology stocks amid growing global unease around artificial intelligence valuations.
The benchmark BSE Sensex fell 559 points to close at 85,674.92, while the Nifty50 slipped below the psychologically important 25,900 mark.
IT STOCKS WORST HIT
The pressure was concentrated in the IT pack after weakness in US tech stocks spilled over into domestic counters. Investors continued to reassess high expectations around AI-driven earnings growth, especially for companies seen as deeply exposed to global technology spending.
Heavyweights such as Infosys, TCS, HCLTech and Wipro witnessed sustained selling through the session. The Nifty IT index emerged as one of the worst-performing sectoral gauges, mirroring weakness in global peers.
Vinod Nair, Head of Research, Geojit Investments Limited, said, “A nosedive correction in the IT index triggered by mounting concerns over AI-led disruptions, along with low expectations of a US Fed rate cut due to strong US job data and unemployment rates, dampened investor sentiment.”
“Globally, AI is reshaping markets by compressing margins in service-intensive sectors and increasing concentration-led volatility. In India, this technology shift is likely to structurally transform IT services by accelerating delivery timelines and automating volume-driven tasks, thereby challenging the traditional headcount-based outsourcing model,” he added.
“A weak sentiment in the IT sector, along with lingering geopolitical tensions between the US and Iran, may influence investors to take a cautious approach in the near term.”
Traders said the trigger was a mix of concerns, including a potential slowdown in discretionary tech spending in the US and fears that aggressive AI investments may not translate into near-term revenue visibility.
The weakness was not confined to IT. Financials and select auto names also traded in the red, though losses there were relatively contained compared to the technology space.
Market breadth remained negative through most of the day, reflecting a broader risk-off tone. Midcap and smallcap indices ended lower as well, suggesting that the nervousness extended beyond frontline stocks.
Global cues offered little comfort. Overnight losses on Wall Street, particularly in AI-linked names, added to domestic caution. Investors are increasingly questioning whether the AI trade, which powered markets over the past year, is entering a phase of recalibration.
For now, 25,900 on the Nifty appears to be an immediate level to track. A sustained move below this mark could trigger further technical selling. On the upside, any recovery in global tech sentiment may offer short-term relief.
The larger question is whether this is a healthy correction in overheated pockets or the beginning of a deeper reassessment of AI-led growth assumptions. For retail investors, the focus may need to remain on discipline rather than reacting to daily volatility.
