The BSE Sensex opened 800 points lower by 1% at 82,903, while the Nifty 50 fell 236 points to start the day at 25,571 or 0.9% lower. Here are the top reasons why bears have taken over Dalal Street:
1.) IT sell-off
The sell-off in IT stocks deepened for the second time in a row after ADRs of Infosys and Wipro fell nearly 10% overnight. In Friday’s trade, the Nifty IT index fell over 4%, extending its two-day decline to nearly 10%. Heavyweights such as TCS, Infosys, Wipro, Tech Mahindra, HCLTech and Mphasis also fell 4-6%, reflecting broad-based weakness in the sector.
Bearish sentiment increased after US-based AI startup Anthropic unveiled a new enterprise-focused tool aimed at corporate legal teams. The company – known for its Claude chatbot – said the platform can automate a range of functions such as contract reviews, non-disclosure agreement triage, compliance workflows, short-term legal preparation and standardized responses, raising concerns about the long-term demand prospects for traditional IT services.
“Tech stocks, reeling under the anthropic shock, are unlikely to recover anytime soon,” warned VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited. He added that Indian IT may remain under pressure in the near term, while a rotation of capital into stronger performing sectors could support non-tech stocks.
2.) Weak global stock markets
Wall Street ended sharply lower on Thursday, led by a steep sell-off in technology stocks, as investors grew increasingly concerned about artificial intelligence’s disruptive impact on earnings visibility and sector margins.
The tech-focused Nasdaq tumbled about 2%, while broader markets also came under pressure as investors assessed new labor market data from the United States and anticipated January’s closely watched inflation report. The Dow Jones Industrial Average fell 669.42 points, or 1.34%, to 49,451.98, the S&P 500 fell 108.71 points, or 1.57%, to 6,832.76, and the Nasdaq Composite fell 469.32 points, or 2.03%, to 22,597.15.
Asian markets followed Wall Street lower on Friday, retreating from recent record highs as concerns about margin pressure in the tech sector weighed on heavyweights like Apple. Investors also shifted to safe-haven assets ahead of key US inflation data. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.6%, although it continued to rise 4.1% for the week, while Japan’s Nikkei index fell 0.9% but was still up 5.3% on the week.
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3.) Dollar strength, rupee weakness
A strengthening US dollar, which has risen for the third session in a row to 96.93, along with a weaker rupee, which opened 0.1% lower at 90.67 per US dollar versus 90.59 previously, is generally negative for equities as it could trigger an outflow of foreign funds from emerging markets such as India into safer assets in the United States.
4.) Weak technical design
Nifty ended lower on Thursday, breaking out of the recent consolidation band and forming a short-term range from lower high to lower low. The 26,000 zone remains a strong above-ground supply area, reinforced by many calls and repeated rejections. Immediate support has shifted to 25,700. Below this, the 25,650–25,550 zone becomes crucial as it aligns with the 20-day and 100-day EMAs – making it an important structural buffer. As long as this broader support band holds, the overall trend remains mildly constructive despite the near-term weakness.
“Momentum indicators indicate caution. The RSI has cooled and the upside is waning. A decisive break below 25,700 could extend the decline towards 25,600 or lower levels. On the upside, only a sustained move above 25,900-26,000 could revive bullish momentum, potentially pushing the index towards 26,100-26,300,” Ponmudi said R, CEO of Enrich Money.
5.) Geopolitical tensions continue
Rising tensions in the Middle East have kept markets on edge after US President Donald Trump warned of possible action against Iran if a nuclear deal is not reached, even as diplomatic negotiations continue. Adding to the uncertainty, Trump said he is considering deploying a second aircraft carrier to the region as Washington and Tehran prepare to resume negotiations. Earlier this week, he warned that Iran could face “something very difficult” if it did not meet US demands. Tehran has signaled its willingness to impose limits on its program in exchange for sanctions relief, while rejecting broader demands beyond the nuclear issue.
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