Mumbai, February 12 – The benchmark BSE Sensex fell by 558 points on Thursday, driven by heavy selling in IT stocks, as concerns over disruptions caused by AI and waning expectations of a rate cut by the US Federal Reserve weighed on investor sentiment.
The 30-share BSE Sensex declined by 558.72 points, or 0.66%, to close at 83,674.92. During the day, it fell by 716.97 points, or 0.85%, hitting an intraday low of 83,516.67.
The 50-share NSE Nifty declined by 146.65 points, or 0.57%, to end at 25,807.20.
Technology stocks were the biggest drag, with Tech Mahindra, Infosys, and Tata Consultancy Services (TCS) each falling by nearly 6%.
HCL Technologies, Mahindra & Mahindra, Hindustan Unilever, Reliance Industries, Eicher, HDFC Bank, Indigo, Kotak Mahindra Bank, and Adani Ports also saw declines.
Conversely, Bajaj Finance, ICICI Bank, Trent, Bharat Electronics Ltd, State Bank of India, Asian Paints, Bajaj Finserv, Titan, Larsen & Toubro, Bharti Airtel, and Tata Steel were among the gainers.
The BSE MidCap Select Index fell by 0.48%, while the SmallCap Select Index slipped by 0.28%.
Among sectoral indices, the IT sector experienced the steepest decline, falling by 5.40%, followed by the Realty sector at 1.50%. The Oil & Gas and Energy sectors also declined by 1.18% each. The Services, FMCG, Consumer Discretionary, and Commodities sectors saw declines of 0.81%, 0.43%, 0.38%, and 0.32% respectively.
However, Financial Services, Industrials, Telecommunication, Capital Goods, Consumer Durables, and the Top 10 Banks on the BSE were the only sectors to see gains. A total of 2,582 stocks declined, while 1,634 advanced and 152 remained unchanged on the BSE.
Shares of TCS fell by 5.41%, pushing its market capitalization below Rs 10 lakh crore for the first time.
At the close of trading, the company's market valuation stood at Rs 9,95,661.50 crore, placing it sixth among the country's most valuable listed companies.
ICICI Bank, whose shares gained nearly 2% during the day, overtook TCS to claim the fifth position in the list of India's top 10 most valuable listed firms.
"We expect markets to remain range-bound as the third quarter earnings season comes to an end. The market will now focus on other triggers, including global and domestic inflation, trade developments, and FII flows. The volatility could also be influenced by AI-related disruptions," Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, said.
Khemka added that the decline in IT stocks was driven by fading expectations of a near-term rate cut by the US Federal Reserve after better-than-expected January jobs data in the US, as well as investor concerns that new advanced AI models could automate several traditional IT services, potentially impacting future business growth.
Meanwhile, foreign institutional investors turned net buyers in February, purchasing equities worth Rs 5,913 crore so far this month (up to February 11), providing some support to overall sentiment, he said.
"The sharp correction in the IT index, triggered by mounting concerns over AI-led disruptions, coupled with low expectations of a US Fed rate cut due to strong US job data and unemployment rates, dampened investor sentiment," Vinod Nair, Head of Research, Geojit Investments Limited, said.
He added that in global markets, AI is reshaping markets by compressing margins in service-intensive sectors and increasing concentration-led volatility.
"In India, this technological 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," Nair said.
"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," Nair said.
In Asian markets, South Korea's Kospi closed over 3% higher. Japan's Nikkei 225 index and Shanghai's SSE Composite index also ended on a positive note, while Hong Kong's Hang Seng benchmark finished in the negative territory.
European markets are trading higher in mid-session deals. US equities ended lower on Wednesday.
Meanwhile, foreign institutional investors bought equities worth Rs 943.81 crore on Wednesday, while domestic institutional investors were the net sellers of stocks worth Rs 125.36 crore, according to exchange data.
Brent crude, the global oil benchmark, fell by 0.27% to USD 69.21 per barrel.
On Wednesday, the 30-share BSE Sensex slipped by 40.28 points to close at 84,233.64, while the NSE Nifty edged up by 18.70 points to settle at 25,953.85.
