Dalal Street on Tuesday witnessed one of its sharpest single-day declines in recent months as benchmark indices cracked under intense selling pressure, led by a brutal meltdown in information technology stocks. The 30-share S&P BSE Sensex plunged over 1,000 points intraday, while the Nifty 50 slid sharply, reflecting widespread risk aversion across sectors. Investor wealth worth over ₹5 lakh crore was wiped out in the bloodbath amid panic on the Street.

IT stocks bear the brunt

The technology pack was the epicentre of the carnage, with the Nifty IT index tumbling over 5% today, emerging as the worst-performing sectoral gauge. Heavyweights such as Infosys, TCS, and Wipro hit their respective 52-week-lows, HCL Technologies and Tech Mahindra also saw steep cuts, dragging frontline indices lower.

Mid- and small-cap IT stocks fared even worse, as investors rushed to exit positions amid rising concerns over the long-term impact of artificial intelligence on traditional outsourcing and legacy software services.

Market participants said fears that advanced AI tools could automate large portions of code migration, system upgrades and maintenance work — areas that have historically driven steady revenues for Indian IT firms — triggered aggressive profit booking.

Jefferies downgraded Infosys, HCL Technologies, and Mphasis to 'Hold' while shifting TCS, LTIMindtree, and Hexaware to 'Underperform', citing AI-driven margin risks. Conversely, CLSA noted that AI disruption fears for Infosys, Tech Mahindra, and TCS appear overdone based on current channel checks.

Global cues add to the gloom

Weak global signals compounded domestic worries. Overnight declines in US and Asian markets, particularly in technology-heavy indices, set a negative tone for trading. Persistent geopolitical tensions and renewed protectionist rhetoric in key global economies further dampened investor sentiment.

The Indian rupee also weakened against the US dollar, adding another layer of caution. Currency volatility often affects hedging costs and margin outlooks, particularly for globally exposed companies.

The sell-off was also triggered by a Wall Street Journal report that came out late Monday, which said president Donald Trump’s administration is considering new “national security” tariffs on imports in the wake of a recent US Supreme Court ruling that struck down many of his second‑term tariff levies as exceeding presidential authority.

These new tariffs would be separate from the 15% global tariff Trump has already announced. They would be issued under Section 232 of the Trade Expansion Act of 1962, a law that allows tariffs on imports deemed a threat to US national security, the report said.

Market breadth turns deeply negative

The sell-off was broad-based. On both the BSE and NSE, declining stocks outnumbered advancing ones by a wide margin. Financials and auto stocks joined the slide, while defensive sectors such as FMCG and pharmaceuticals offered limited support.

Traders also pointed to weekly derivatives expiry as an additional trigger, which amplified volatility as participants unwound leveraged positions.