Bleeding IT Stocks, Austerity Measures, Rising Crude Wipes Rs 11.28 Lakh Crore From Market

Indian markets extended losses for the fourth consecutive session as the lack of progress in US-Iran negotiations continued to create nervousness across global markets.It was the steepest single-day fall of the current financial year. Nifty-50 has now surrendered over 1,100 points from its recent swing high of 24,482 in just four days, underscoring the sheer intensity of the bearish momentum, said analysts from Motilal Oswal and HDFC Securities.Rupee's fall to the lowest level of 95.74-75 per US dollar added to negative sentiment among the foreign investors towards Indian equities. Foreign portfolio investors were net sellers by Rs 1959.39 crore while domestic institutions were net buyers by Rs 7990.32 crore.

Fresh AI threats to the traditional IT services model led to heavy selling in Indian IT stocks after US based OpenAI, an artificial intelligence deployment firm, announced a new AI deployment company backed by USD 4 billion funding.The Sensex fell 1456.04 points or 1.92 per cent to 74,559.24 after touching intraday low of 74,449.50 while Nifty-50 dropped to 23,379.55 shedding 1.83 per cent or 436.30 points after touching a low of 23,348.40 intraday. There was a bigger fall in Broader market with BSE 200 and BSE 500 indices down by 2.08 and 2.19 per cent respectively.

"Escalating tensions in West Asia have heightened fears of a prolonged geopolitical conflict, keeping investors risk-averse and triggering sustained selling across financial markets. Unless there is any meaningful progress in negotiations or signs of de-escalation in the West Asia conflict, volatility and weakness in domestic equities are likely to persist," said Siddhartha Khemka, head-Research, Motilal Oswal Financial Services.BSE IT index fell 3.87 per cent while other big losers were Realty(-4.22 per cent),Consumer Durables(-3.35 per cent) and Bankex(-1.70 per cent). Volatility index NSE's India VIX climbed 3.92 per cent to 19.28, indicating high volatility to continue.

Shashwat Singh, fundamental analyst,Bajaj Broking said,"IT stocks faced a sharp correction following OpenAI’s announcement of "The Deployment Company," a new business unit designed to provide direct, hands-on enterprise AI implementation. By acquiring the consulting firm Tomoro and utilizing "Forward Deployed Engineers," OpenAI is moving beyond model development into the high-value territory of workflow redesign and organisational transformation." "This launch is the latest in a series of aggressive moves over the last 3 to 4 months where AI giants have transitioned from providing tools to offering end-to-end services, creating a structural threat to the traditional billable-hour models that have long sustained the global IT industry."

"As OpenAI scales its ability to build "AI-native" infrastructure directly for clients, the legacy IT sector faces a "collision" of technological disruption and macroeconomic instability, leading to today’s significant dip,” said Singh.

Tier II IT stocks saw heavy selling with stocks down by 5 to 13 per cent each. Among tier I top losers included TCS(-3.84 per cent), Infosys(-3.09 per cent), HCL Technologies(-4.11 per cent), Wipro(-3.59 per cent), Tech Mahindra(-4.44 per cent) and"The market reaction was particularly severe for India’s service-based IT giants, as investors fear these companies may be sidelined by AI companies that can now automate and deploy their own technology more efficiently. This concern over the long-term viability of the offshore service model has been compounded by rising geopolitical tensions, which have dampened global risk appetite and triggered a broad-based sell-off," said Bajaj Broking.

Beyond IT, correction in jewellery stocks continued on PM's appeal to postpone gold purchases - Titan Company(-3.60 per cent), Kalyan Jewellers(-6.10 per cent), Senco Gold(-6.39 per cent), TBZ(-5.89 per cent) and P N Gadgil Jewellers(-6.02 per cent).Oil & Gas marketing companies also registered fresh fall-Indian Oil Corporation(-1.92 per cent), BPCL(-2.29 per cent), Hindustan Petroleum(-2.13 per cent),IGL(-2.43 per cent) and GAIL(-1.48 per cent). Upstream oil & gas companies gained-ONGC(5.09 per cent),Oil India(7.52 per cent).

"Escalating tensions in West Asia have heightened fears of a prolonged geopolitical conflict, keeping investors risk-averse and triggering sustained selling across financial markets. Unless there is any meaningful progress in negotiations or signs of de-escalation in the West Asia conflict, volatility and weakness in domestic equities are likely to persist," said Siddhartha Khemka, head of Research, Motilal Oswal Financial Services.