IT rout drags Indian markets down over 1% amid AI disruption fears

Indian equity markets experienced a significant downturn on Friday, with major indices falling over 1% due to a steep selloff in the IT sector. Concerns regarding potential disruptions to the U.S. economy from artificial intelligence (AI) advancements and the highest job losses since the subprime crisis have exacerbated market volatility. The NSE Nifty declined by 336.10 points, closing at 25,471.10, while the BSE Sensex fell by 1,048.16 points to reach 82,626.76. This decline marked a weekly loss of up to 1.1% for both indices. The Nifty IT index suffered a notable drop, falling 5.2% during the day and ultimately closing 1.4% lower, contributing to an 8% weekly decline—the largest in ten months. As investors reacted to the sharp decline in U.S. IT stocks, the Nifty Metal index and Realty index also faced losses of 3.3% and 2.2%, respectively. Amidst this backdrop, foreign portfolio investors net sold ₹7,395 crore, while domestic institutions bought ₹5,554 crore. Despite these challenges, analysts suggest that the current dip in IT stocks may present a buying opportunity, although caution is advised given the uncertain growth outlook. The global market sentiment, particularly in the U.S., remains unfavorable, raising concerns about the potential impact on Indian IT firms as competitive pressures mount.