The NSE Nifty fell 288.35 points, or 1.1%, to close at 25,424.65. The BSE Sensex fell 1,068.74 points, or 1.3%, to end at 82,225.92.
The Nifty IT index plunged 4.7% to the lowest close since August 2023, tracking the stampede out of US software stocks overnight as investors continued to fret over the AI impact on the industry. IBM tumbled 13% on Monday night, its biggest one-day decline since 2000, after Anthropic said its AI tool Claude Code could streamline programming language COBOL, signalling AI’s ability to automate legacy-system maintenance.
“Modernising a COBOL system once required armies of consultants spending years mapping workflows,” Anthropic said in the post.
AgenciesFurther Downside Seen
“Tools like Claude Code can automate the exploration and analysis phases that consume most of the effort in COBOL modernisation. With AI, teams can modernise their COBOL codebase in quarters instead of years,.” Anthropic said in the post.
Globe Capital Market head of research Gaurav Sharma said, “The ongoing IT sell-off, driven by concerns around AI, continues to weigh heavily on market sentiment, and we believe the space could see further downside.”
Sharma said the breakdown in the Nifty IT index shows no signs of stabilising, with the potential to test the 27,500 level, against Tuesday’s close of 30,053.50, implying an additional 5-10% correction in large-cap IT names.
Since February 3, when Anthropic announced AI tool Claude Cowork and pushed investors to flee the sector, the IT index is now down more than 21% over the past month, and about 22% since the announcement.
Broader markets resilient
The broader markets were relatively resilient. The Nifty Midcap 150 fell 0.3%, while the Nifty Smallcap 250 declined 0.6%. Of the total 4,367 stocks traded on the BSE, 1,344 advanced and 2,889 declined at close.
Elsewhere in Asia, Japan and China rose about 0.9% each. South Korea gained 2.1% and Taiwan climbed 2.8%. Hong Kong fell 1.8%. The pan-European Stoxx 600 index was flat at the time of going to print.
Back home, foreign portfolio investors (FPIs) net sold shares worth Rs 103 crore, while domestic institutional investors were buyers to the tune of Rs 3,161 crore. Weaker global cues, particularly due to rising geopolitical tensions, have also added to uncertainty, with the prospect of a US-Iran conflict looming.
“Any escalation in tensions between the US and Iran could reignite concerns across the Gulf region,” said Sharma. “Early signs are visible in crude oil and precious metal prices, and a sustained rise in crude as well as gold and silver could trigger more weakness in equities.”
Brent crude May futures continued to hover above the $71 level, showing no signs of cooling off. Gold and silver prices saw a minor dip of nearly 1% each but remained above levels seen a week ago.
Technical indicators are pointing to further weakness in Indian equities. Mehul Kothari, DVP, technical research, Anand Rathi Share and Stock Brokers said after Tuesday’s sharp decline, the Nifty broke below its previous swing low near 25,370.
VIX down 0.1%
The Nifty’s India Volatility Index, or VIX-widely used as a gauge of market fear-fell marginally by 0.1% to 14.15, suggesting options traders see lower chances of a sharper fall. The index has gained 13.5% over the past five sessions.
Kothari said the 25,400-25,300 zone is likely to act as a key support for the Nifty in the coming sessions.
“If this level holds, the market may attempt to stabilise. On the upside, 25,600 will remain a strong resistance level, and a decisive move above it is required for bulls to regain control,” he said.