IT sell-off deepens as AI fears and US rate signals pull Nifty to 25,800, Sensex down 559 points
| Index | Price | Change | % Chg |
| Nifty 50 | 25,807.20 | 146.65 | -0.57% |
| Nifty Bank | 60,739.75 | 5.60 | -0.01% |
| Nifty Financial | 28,385.20 | 108.25 | +0.38% |
| BSE SENSEX | 83,674.92 | 558.72 | -0.66% |
Indian equity benchmarks ended lower on February 12, dragged by a sharp sell-off in information technology shares as investors reacted to artificial intelligence–led disruption concerns and stronger-than-expected US jobs data that dampened hopes of near-term rate cuts.
The Nifty 50 fell 146.65 points, or 0.57%, to close at 25,807.20, hovering near the 25,800 mark and snapping a four-day winning streak. The BSE Sensex declined 558.72 points, or 0.66%, to 83,674.92. Both indices traded in a relatively narrow band through the session after a weak opening.
The decline wiped out an estimated ₹2.80 lakh crore in investor wealth, with total BSE market capitalisation slipping to about ₹472 lakh crore, according to exchange data.
The Nifty IT index dropped around 5%, sliding to a 10-month low and extending its recent correction. The sector had already fallen about 7% last week and is down roughly 11% so far in 2026 after a 12.6% decline in 2025.
Why it matters: IT’s weight makes it a market mover
The IT sector carries significant weight in benchmark indices and in foreign investor portfolios. Sharp moves in frontline IT stocks often ripple through the broader market, influencing index direction, derivatives positioning and sentiment.
The latest decline underscores how quickly global macro signals—particularly from the US, the largest market for Indian IT services—can affect domestic equities. Strong US jobs data reduces the likelihood of early Federal Reserve rate cuts, which in turn supports higher bond yields and pressures growth-oriented sectors such as technology.
At the same time, the debate over AI’s impact on traditional IT services business models is shifting from theoretical to financial, with investors reassessing earnings durability and valuation multiples.
Top Sector Gainers
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Consumer Durables – +0.40%
Benefited from relative defensive positioning as discretionary demand stocks outperformed the broader market. -
Metal – +0.02%
Minimal gain amid selective buying in specific commodity-linked names.
Top Sector Losers
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Information Technology (IT) – -5.51%
The hardest hit sector as AI disruption fears and weak global tech cues drove widespread selling. -
Realty – -1.45%
Declined on risk-off sentiment and profit booking in heavyweight real estate names. -
Media – -1.31%
Underperformed amid sector-wide weak flows. -
Oil & Gas – -1.19%
Weighed by broader risk aversion despite crude strength. -
FMCG – -0.51%
Slightly lower in the session despite defensive characteristics.
Highlights
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The IT sector’s slide was the dominant driver of negative breadth, with the Nifty IT index falling nearly 5% on the session.
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Defensive sectors such as consumer durables held up relatively better, reflecting rotation away from growth and export-driven sectors.
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Broader cyclical sectors (Realty, Media, Oil & Gas and FMCG) also ended in the red, underscoring caution across risk assets.
What we know so far: Heavy selling in frontline IT names
Selling was concentrated in large-cap IT stocks:
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Infosys, TCS, Wipro, Tech Mahindra and HCL Technologies fell between roughly 4% and 6%
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Tech Mahindra, Infosys and TCS were among the top losers on the Nifty 50
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The Nifty IT index tumbled to around 33,400 levels, marking a multi-month low
Analysts linked the fall partly to weakness in US-listed ADRs of Indian IT firms and to global tech stock pressure following US macro data.
“It’s a mix of knee-jerk reaction and concerns over real threat to IT,” Vinit Bolinjkar, Head of Research at Ventura Securities, told Reuters. He said AI automation targets labour-heavy models at top Indian IT firms, potentially reducing billable hours and headcount.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said a quick recovery in tech stocks looks unlikely after sharp declines in US-traded shares of Indian IT majors. He added that recent US data pointing to job additions of about 130,000 and unemployment at 4.3% reduces the case for near-term Fed rate cuts.
What remains unclear: How deep the earnings impact could be
Despite the sharp reaction, several questions remain open:
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It is not yet clear how quickly AI adoption will translate into revenue pressure for Indian IT firms
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Companies have argued AI can lift productivity and margins, but investors are still testing that narrative
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Deal pipelines and pricing trends for FY26–FY27 are still evolving
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The extent of client spending moderation in the US and Europe remains a key variable
Analysts caution that sentiment has moved faster than confirmed earnings downgrades, suggesting volatility may persist as more data emerges.
Market or sector impact: Financials cushion but can’t offset IT
Financial stocks provided partial support but were not enough to offset IT losses.
Major gainers on the Nifty included:
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Bajaj Finance (+3.31%)
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Shriram Finance (+2.48%)
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Eicher Motors (+2.13%)
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ICICI Bank (+1.84%)
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Bharat Electronics (BEL) (+1.47%)
Major losers included:
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Tech Mahindra (-6.40%)
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Infosys (-5.97%)
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TCS (-5.77%)
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HCL Technologies (-5.20%)
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Wipro (-4.79%)
Sectorally, only Consumer Durables (up about 0.4%) and marginal gains in metals ended positive. IT was the worst hit, down over 5%, while realty, media, oil & gas and FMCG also closed in the red.
Broader markets underperformed:
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Nifty Midcap 100 fell about 0.5–0.6%
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Nifty Smallcap 100 dropped around 0.6–0.7%
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Nifty Next 50 slipped about 0.5%
Market breadth was negative. On the BSE, roughly 2,000–2,400 stocks declined versus about 1,100–1,600 advances, depending on the segment. More than 120 stocks hit 52-week highs, while around 100 touched 52-week lows, reflecting a mixed but cautious market.
Broader context or background: Global cues and crude oil
Global cues were mixed. US markets had closed lower in the previous session, and parts of Asia traded weak. Strong US labour data has shifted expectations on the Fed’s rate path.
Crude oil prices also edged higher, with Brent rising around 0.4–0.5% to near $69–70 per barrel amid US–Iran tensions. Higher oil prices are typically seen as negative for India because they can widen the trade deficit and add to inflation pressures.
Despite Thursday’s fall, both Sensex and Nifty remain about 2% below record highs and are still up roughly 2.5% for the month, supported earlier by optimism around trade developments and selective FII inflows.
What analysts or officials are saying: Uptrend intact but momentum softer
Technical analysts said the Nifty is still holding above key moving averages despite the correction.
The index traded largely in the 25,750–25,850 range during the day. It managed to close above its 20-day moving average, keeping the possibility of a recovery alive, though momentum indicators suggest consolidation.
Key technical levels flagged by market participants:
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Support: 25,700–25,750 zone, with deeper support near 25,500
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Resistance: 25,900–26,000 band
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A sustained move above 26,000 could reopen the path toward the record high near 26,373
Devarsh Vakil, Head of Prime Research at HDFC Securities, said the broader uptrend remains intact as long as key supports hold, but near-term moves may stay range-bound.
What it means for investors or stakeholders: Volatility likely to persist
For investors, the session highlights several takeaways:
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IT stocks may remain volatile as AI and global rate expectations are repriced
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Financials continue to attract buying on growth and asset quality visibility
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Broader market participation is selective rather than broad-based
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Global macro data is again a key driver for Indian equities
Foreign institutional investors were net buyers of about ₹944 crore in the latest session, extending a buying streak. February inflows have reached about $1.7 billion after three months of outflows, offering some cushion to the market.
What to watch next: Data, earnings and global signals
Key triggers ahead include:
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US inflation and rate signals from the Federal Reserve
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Management commentary from IT firms on AI and deal pipelines
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FII flow sustainability
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Crude oil trajectory and geopolitical developments
Until clearer earnings signals emerge, analysts expect markets to oscillate within a range, with sector rotation rather than a broad rally.
For now, the message from Dalal Street is cautious: the long-term uptrend may be intact, but the leadership—especially from IT—appears under review.
FAQs Tech-led sell-off hits markets again with Nifty and Sensex
Q) Why did Indian IT stocks fall sharply despite stable domestic economic signals?
Indian IT stocks fell mainly due to global triggers rather than domestic weakness. Stronger-than-expected US jobs data reduced the likelihood of near-term Federal Reserve rate cuts, which typically pressures growth and export-oriented sectors like IT. At the same time, rising concerns that artificial intelligence could compress traditional IT services revenue models added to investor anxiety, leading to broad-based selling.
Q) How does US economic data influence Indian IT stock prices so strongly?
Indian IT companies derive a large share of their revenues from the US market, especially from enterprise technology spending. When US macro data signals slower rate cuts or weaker corporate spending potential, investors anticipate tighter IT budgets from global clients. This directly affects earnings expectations and valuation multiples for Indian IT firms.
Q) Are AI-driven disruptions already hurting the earnings of Indian IT companies?
So far, there is limited evidence of a direct earnings hit purely from AI. Most concerns remain forward-looking. Analysts note that AI is currently more of a productivity enhancer than a full replacement for complex IT services. However, the market is pricing in the possibility that automation could reduce billable hours and hiring needs over time.
Q) Why are financial stocks rising while IT stocks are falling in the same market?
Financials are more closely tied to domestic credit growth, interest rate cycles, and consumption trends. With India’s growth outlook relatively stable and credit demand healthy, banks and NBFCs are attracting investor interest. IT stocks, in contrast, are exposed to global tech cycles and currency movements, creating divergence in sector performance.
Q) Does a 10-month low in the Nifty IT index signal a long-term bearish trend?
Not necessarily. A 10-month low indicates strong near-term pressure, but long-term trends depend on earnings delivery and deal pipelines. If companies demonstrate resilient margins, AI monetization strategies, and stable demand from global clients, the sector could stabilize. Technical analysts say key support zones will determine whether the fall extends or reverses.
Q) How should retail investors approach IT stocks during AI-related volatility?
Retail investors are generally advised to avoid panic-driven decisions. Volatility often creates both risks and opportunities. Investors with long-term horizons may watch for valuation comfort, earnings commentary on AI integration, and management guidance. Staggered investments rather than lump-sum entries can help manage timing risk.
Q) What signals could trigger a recovery in Indian IT stocks?
Potential recovery triggers include:
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Clear evidence that AI boosts margins instead of hurting revenues
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Improvement in US tech spending outlook
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Fed rate-cut signals supporting growth stocks
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Stable or appreciating rupee
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Strong deal wins and earnings upgrades from major IT firms
A combination of these factors would likely rebuild investor confidence.
