AI anxiety deepens IT rout, drags Indian benchmarks to weekly losses
- Benchmark Nifty 50 down 0.9% and the BSE Sensex down 1.1% for the week
Indian shares fell sharply on Friday, dragging benchmarks to weekly losses as anxiety around AI automation and fading hopes of an imminent U.S. rate cut deepened the ongoing sell-off in information technology stocks.
IT, the second-heaviest weighted index among 16, fell 8.2% this week, their worst showing in 10 months.
The slump pulled benchmark Nifty 50 down 0.9% and the BSE Sensex down 1.1% for the week, eroding gains from the interim India-U.S. trade deal.
“The ongoing IT rout implies the market is pricing the risks of uncertainty over whether Indian software firms will be able to retain productivity gains and protect their revenues,” said Hiren Dasani, chief investment officer for emerging markets at Whiteoak Capital.
“Nobody can say with confidence where IT business models will land,” added Dasani, calling AI’s potential to automate routine work and shorten delivery timelines “existential concerns”.
The index has slumped 13.7% so far in 2026, surpassing 2025’s 12.6% drop. The 10 companies in the Nifty IT index have collectively lost about $50 billion in market value in February.
Overnight, the technology-heavy Nasdaq Composite tumbled 2% after Cisco Systems posted quarterly adjusted gross margin below estimates and as investors were cautious ahead of U.S. inflation data, due on Friday.
Stronger-than-expected U.S. jobs data in January has dented expectations of a near-term rate cut by the Federal Reserve.
Asian markets fell 1% on the day.
The Nifty 50 and the BSE Sensex lost 1.3% and 1.25%, respectively, with all 16 sectors logging losses on the day. The broader small-caps and mid-caps lost 1.8% and 1.7%.
Bucking the trend, State Bank of India – the country’s largest lender - rose 12.4% this week on December quarter profit beat and an upbeat loan growth outlook for the ongoing fiscal year.
On the day, Hindalco fell 5.7%, after reporting a 45% year-on-year quarterly profit drop driven by expenses linked to fire-related disruptions at U.S. unit Novelis.
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