Why is the stock market declining today as the Sensex drops 1,000 points?

Major information technology equities saw a steep decline on Tuesday morning, putting significant pressure on Dalal Street’s main indices and sending the market as a whole into the red.

The NSE Nifty50 ended the day at 25,424.65, down 288.35 points, while the BSE Sensex had fallen 1,068.74 points to 82,225.92.Early trading saw the Nifty IT Index fall by about 5%, indicating that the technology sector was the focus of selling. For the average reader, this simply implies that the market declined as the majority of large IT companies fell at the same time.

Selling was widespread across all of the main IT brands. Tech Mahindra down 6.17% to Rs 1,352, while LTIMindtree slid 6.43% to finish at Rs 4,521. Coforge fell 5.24 percent to Rs 1,221.50, while HCLTech down 5.83% to Rs 1,343.

Heavy selling also affected large-cap stocks. TCS fell by the same percentage to Rs 2,581, while Infosys ended the day 3.56% lower at Rs 1,280.20. OFSS dropped 3.07% to settle at Rs 6,465 and Mphasis dropped 3.67% to Rs 2,225. Despite being more resilient than its peers, Wipro closed the day 2.62% lower at Rs 200.49. Growing concerns about artificial intelligence are the primary cause. Artificial Intelligence (AI) is technology that can carry out jobs that are typically performed by people. Anthropic, an AI company, recently released strong task-automation technologies.

These are exactly the kinds of services Indian IT companies offer global clients. So even if nothing has changed at the company level, investors worry that future demand for these services could slow down as AI becomes stronger.

According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the downtrend is part of a larger theme. He said, “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.”

While a few non-IT stocks such as Tata Steel, State Bank of India, Asian Paints and Axis Bank opened with small gains, they could not offset the sharp decline in IT.

Foreign investors have been returning to Indian equities over the past few weeks, but they are favouring sectors linked to domestic growth. “FIIs have been buyers in ten out of the last seventeen sessions, but they are buying capital goods and financials, not IT. The IT segment, where FIIs have been sellers, will continue to remain weak,” Vijayakumar noted.

“Nifty has immediate support at 25,500–25,450. A break below this could take it toward 25,300–25,200. On the upside, 25,650–25,750 will act as resistance. The near-term bias remains negative to range-bound,” he said.

On Bank Nifty, he noted that the index looked more stable: “Bank Nifty opened near 61,275 and remains above its major moving averages. As long as it holds 60,900–60,600, the broader trend stays positive.”