Sensex Tumbles Over 1,000 Points as IT Rout, Global Fears Erase ₹2.85 Lakh Crore in Investor Wealth

Indian equity markets witnessed a sharp sell-off on Tuesday, with benchmark indices closing deep in the red amid heavy pressure in IT, auto, and banking stocks. The market downturn erased nearly ₹2.85 lakh crore in investor wealth, bringing the total BSE market capitalisation down to approximately ₹466 lakh crore.

The BSE Sensex plunged 1,069 points, or 1.28%, to settle at 82,226. Meanwhile, the Nifty 50 dropped 288 points to close at 25,425, slipping below the crucial 25,450 level.

Top Movers

Among Sensex constituents, Tech Mahindra, HCL Technologies, Eternal, Infosys, TCS, Larsen & Toubro, and Bharti Airtel declined by as much as 6.3%. On the other hand, NTPC, Hindustan Unilever (HUL), Power Grid Corporation, Tata Steel, and Adani Ports managed modest gains of up to 2.12%.

Why Did the Market Fall? Here Are 6 Key Reasons

1. IT Sector Hit by Fresh AI Disruption Concerns

The sharpest decline was seen in IT stocks after Anthropic announced that its AI tool, Claude Code, can modernise legacy systems built on COBOL. The development raised fears about disruption in traditional IT services, especially those involved in legacy system maintenance and migration.

Infosys fell nearly 3.5%, while HCL Technologies, Mphasis, and Persistent Systems declined up to 6%. TCS, Tech Mahindra, and Wipro also dropped sharply, dragging the Nifty IT index down 4.74%.

The announcement triggered a global ripple effect. In the U.S., IBM shares plunged 13% overnight, intensifying negative sentiment across technology stocks worldwide.

2. Fresh Tariff Threat from Donald Trump

Investor sentiment weakened further after U.S. President Donald Trump signalled potential new global tariffs. Following a U.S. Supreme Court ruling that struck down tariffs under emergency powers, Trump proposed imposing a 15% global tariff under Section 122 of the Trade Act of 1974.

The renewed trade uncertainty sparked fears of escalating global protectionism, pressuring export-oriented sectors, including Indian IT and manufacturing companies.

3. Global Tech Sell-Off and Weak Overseas Markets

Global markets also remained under pressure. The S&P 500 fell 1%, while the Nasdaq Composite dropped 1.1% amid growing concerns that artificial intelligence could disrupt traditional software industries.

The MSCI All Country World Index declined for a second consecutive day. Although Asian markets showed some resilience, global investor sentiment remained fragile due to geopolitical tensions and trade uncertainties.

4. Monthly Derivatives Expiry Adds Volatility

The fall coincided with the monthly expiry of Nifty 50 derivatives contracts, a period often marked by heightened volatility. As traders squared off positions and rolled over contracts, increased hedging and unwinding of long positions amplified selling pressure.

Liquidity thinning in certain counters further exaggerated market movements.

5. Rupee Weakness Raises Concerns

The Indian rupee weakened to 90.95 against the U.S. dollar, declining 0.07%. A weaker currency increases import costs—particularly crude oil—and raises inflation concerns. It can also trigger foreign fund outflows, adding pressure to equity markets.

6. Rising US-Iran Tensions

Geopolitical uncertainty intensified after Donald Trump indicated he was considering military action against Iran if negotiations fail. Iran responded by warning that any U.S. strike would be considered an act of aggression.

The prospect of escalating tensions in the Middle East added to global risk aversion, weighing further on investor confidence.

Market Outlook

With global uncertainties, AI-led disruption fears, tariff tensions, and currency weakness converging, investors remain cautious. Analysts suggest that volatility may persist in the near term, particularly in technology and export-driven sectors.

However, long-term fundamentals of the Indian economy remain intact, and market participants will closely monitor global developments, currency movements, and corporate earnings guidance in the coming sessions.