- Indian markets fell sharply with Nifty 50 down around 1% and Sensex losing 800 points
- Nifty IT index dropped nearly 4% amid fears of AI disrupting business models
- US stocks declined on AI concerns and tariff hike fears, with Dow down 1.66%
The Indian markets faced intense pressure during Friday's trade, with the Nifty 50 trading with cuts of 1%, and Sensex down over a per cent, losing out on around 900 points. All sectors, barring PSU Bank and Metal, were trading in the red, with Nifty IT falling almost 5%, as of 12:20 pm.
The pain was witnessed in the broader market as well, with Nifty Smallcap 250 trading with cuts of almost 0.9%. Nifty Midcap 150 was also down around 0.80%.
Here, we are taking a look at three key reasons dragging the markets on Friday.
IT Stocks Weigh on Indices Over AI Fears
A steep selloff in IT stocks dragged down overall market sentiment on Tuesday, with the Nifty IT index plunging nearly 4% in intraday trade. The sector has now slid close to 20% so far in February, pressured by mounting concerns over AI‑driven business disruptions and the impact of persistently high U.S. interest rates.
Global brokerages Citi, HSBC, and CLSA have sharpened their caution on India's IT services sector, warning that artificial intelligence could structurally reshape business models and pressure valuations - even as stocks have rebounded roughly 16% year-to-date. The cautious tone follows a note from Jefferies, which argued that AI may permanently alter revenue structures across the sector.
Gaurav Udani, Founder of Thincredblu Securities says the pressure is largely coming from the IT sector after fresh disruption concerns linked to Anthropic's AI developments. Stocks on technology remain sensitive to structural shifts, and that is weighing on the broader index.
Harshal Dasani, Business Head, INVAsset PMS says, "Markets have snapped a two-day gaining streak, not because of negative news, but because of rising uncertainty. While the recent U.S. court decision to roll back certain tariff measures appeared positive on the surface, investors remain cautious about the broader policy direction." He adds that markets can price in bad news quickly — what they struggle with is ambiguity. He further says, "The possibility of executive countermeasures, fresh trade actions, or prolonged legal uncertainty keeps risk appetite in check."
Sharp Fall in US Markets Overnight
U.S. stocks slumped sharply on Monday as renewed concerns over how artificial intelligence could disrupt traditional business models resurfaced, compounding investor unease triggered by President Donald Trump's move to hike global tariffs. The Dow Jones Industrial Average sank 821.91 points, or 1.66%, to finish at 48,804.06. The Nasdaq Composite fell 1.13% to 22,627.27, while the S&P 500 declined 1.04% to 6,837.75, pushing the benchmark back into negative territory for the year.
A steep selloff in IBM weighed heavily on the Dow, with the stock plunging 13% after Anthropic unveiled new capabilities for its Claude Code tool, raising questions about potential threats to legacy programming systems long associated with IBM.
Software shares also came under renewed pressure as AI‑related disruption fears continued to swirl. Microsoft slid 3%, while CrowdStrike dropped nearly 10%, extending recent weakness across the sector.
ALSO READ: IBM Business Model At Risk? Anthropic's Claude Can Modernise COBOL Code; Stocks Fall 13%
Surge in Oil Prices Over Iran Tensions
Oil prices edged higher as traders assessed the chances of progress on an Iranian nuclear agreement, after U.S. President Donald Trump signaled he would prefer a diplomatic resolution but cautioned that Iran would face consequences if talks failed.
Brent crude climbed back above $72 a barrel after a marginal decline in the previous session, while West Texas Intermediate hovered near $67. In a social‑media post, Trump warned it would be a “very bad day” for Iran if a deal wasn't reached, while also dismissing reports suggesting the Pentagon was concerned about the feasibility of sustaining a prolonged military operation. The comments injected fresh geopolitical tension into energy markets, helping support prices.
ALSO READ: Oil Markets Hold Ground As Trump Emphasises Diplomacy With Iran
Udani says that the "immediate support for Nifty is placed near 25,400, while resistance is seen in the 25,600–25,650 zone. The index needs to reclaim this resistance band to stabilise near-term sentiment. Bank Nifty, is showing resilience and is trading close to yesterday's levels around 61,250. Support is seen near 61,000, with resistance placed in the 61,450–61,500 range. With today being the monthly expiry, traders should expect volatility in both directions, as positioning adjustments and options-related flows may amplify intraday swings."
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