Sensex settles 1,000 pts lower, Nifty ends below 25,450: Massive IT sell-off among five key factors behind market crash

Sensex down 1,250 pts, Nifty below 25,400: IT sell-off among key factors behind market crash

• Sensex and Nifty drop 1% due to IT stocks sell-off.
• Rising crude prices and weak global cues added to market pressure.
• Nifty IT index dropped over 3 percent amid AI disruption concerns.

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The equity benchmark indices Sensex and Nifty declined up to 1.5 percent on Tuesday, dragged lower by a sharp sell-off in IT shares amid concerns over AI-led disruption, along with rising crude oil prices and weak global cues.

The Sensex settled 1068.74 points or 1.28 percent lower at 82,225.92, while the broader Nifty was at 25,424.65, down 288.35 points or 1.12 percent.

The Sensex plunged 1,360 points or 1.63 percent to hit an intraday low of 81,934.73. The broader Nifty declined 385 points or 1.5 percent to 25,327.60 during the session, breaching the 25,350 mark.

Among Nifty constituents, HCL Technologies, ETERNAL and Infosys were among the major laggards, declining up to 4 percent. On the other hand, Power Grid Corporation of India and Asian Paints rose up to 0.5 percent.

Market breadth was skewed in favour of bears, as about about 1382 shares advanced, 2670 shares declined and 129 shares unchanged.

The Nifty Midcap100 and Nifty Smallcap100 indices also declined up to 1 percent intraday.

Key factors behind market decline

1) IT sell-off: Selling in IT stocks weighed heavily on the benchmarks after fresh global concerns over AI-led disruption resurfaced. The pressure followed claims by Anthropic that its Claude Code tools can significantly reduce the cost and complexity of modernising legacy software systems. The Nifty IT index fell more than 5 percent.

"The trend of weakness in tech stocks stemming from the potential AI impact continues. The weakness in the ADRs of Indian IT companies indicates that this segment will continue to remain under pressure," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

2) Rupee declines: The rupee traded in a narrow range on Tuesday and settled 6 paise lower at 90.95 against the US dollar amid a firm greenback and higher crude oil prices. A sharp fall in domestic equity markets and uncertainties over the India-US trade deal further pressured the local unit, while foreign fund inflows lent some support, forex traders said.

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3) Weak global cues: Asian markets were largely muted, while US equities ended nearly 2 percent lower overnight. The decline followed remarks by US President Donald Trump warning countries against abandoning newly negotiated trade deals after the Supreme Court struck down emergency tariffs, stating that higher duties could be imposed under other trade laws.

"President Trump’s State of the Union address today and the message that he would convey will be keenly watched by markets globally. The EU freezing the deal with US in light of the tariff changes following the US Supreme Court verdict and Trump’s warnings to countries backing away from deals indicate that the tariff developments could continue to weigh on economies and markets," Vijayakumar said.

4) Weekly expiry: Tuesday being the weekly expiry of Nifty derivatives contracts also contributed to volatility. On expiry days, traders square off or roll over positions in the futures and options segment, leading to sharp intraday swings.

5) Crude rises: Brent crude, the global oil benchmark, rose 1 percent to USD 72.13 per barrel. Higher crude prices are a concern for India as they can widen the trade deficit and fuel inflationary pressures, impacting investor sentiment.

Technical outlook

Anand James, Chief Market Strategist, Geojit Investments Limited, said Nifty struggled to hold above 25,700 in the previous session, indicating a loss of upward momentum.

"Since oscillators are yet to signal an outright collapse, our preferred view for the day is to look for swings on either side of 25,550, with a broader range seen between 25,300 and 25,840," he said.

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