Markets in free fall: Sensex tanks 1,442 points in two days, Nifty down 1.7%; ₹9 lakh crore investor wealth wiped out

Indian equity markets have witnessed a sharp sell-off over the past two trading sessions, with benchmark indices tumbling as much as 1.7% amid broad-based weakness across sectors. The steep decline resulted in a massive erosion of investor wealth, with the market capitalisation of listed companies shrinking by nearly ₹9 lakh crore.

The Sensex plunged 1,442 points in two sessions, while the Nifty slipped 1.7% amid heightened investor caution and sustained selling pressure. The fall was largely driven by heavy selling in IT stocks, as investor sentiment was rattled by rapid AI developments, including a new corporate legal tool from Anthropic. Adding to the woes, stronger-than-expected U.S. job growth dampened hopes of an early rate cut by the Federal Reserve, further weighing on market sentiment.

On Friday, the benchmark indices extended losses, with the BSE Sensex tumbling as much as 866 points, or 1.04%, to 82,807, while the NSE Nifty dropped 282 points, or 1.1%, to the 25,524 level. In the previous session on Thursday, the indices had already declined nearly 0.6% amid sustained selling in the IT space, with the Nifty IT index plunging over 5%, signalling persistent weakness in technology stocks.

“Markets have entered a turbulent phase that could trigger some panic among investors, even as it creates selective opportunities. The sell-off in AI-linked stocks in US markets was anticipated, although its timing and magnitude were uncertain. The recent decline is not indicative of a crash, but if the downtrend persists, it could exert further pressure on US markets,” said V.K. Vijayakumar, Chief Investment Strategist, Geojit Investments.

For Indian equities, the correction in AI stocks could be relatively positive, as last year’s global rally was largely driven by AI plays, a segment where India remained a laggard. Hence, a sustained unwinding of the AI trade may benefit the Indian market. However, the immediate concern is the sharp sell-off in IT stocks, which represent the second-largest profit pool for India Inc. The actual impact of the ‘Anthropic shock’—triggered by developments at Anthropic—on the IT sector is yet to be fully assessed. Panic selling in IT stocks at this stage may not be advisable, and investors could consider adopting a wait-and-watch approach until clarity emerges.

He said that market volatility can be utilised to accumulate high-quality growth stocks, particularly companies that have delivered strong Q3 results. Auto stocks are likely to remain resilient, supported by robust earnings and favourable growth prospects. Any decline in this segment due to broader market weakness may present buying opportunities.”

Shrikant Chouhan, Head – Equity Research, Kotak Securities, said, “The benchmark indices witnessed profit booking at higher levels, with the Nifty closing 147 points lower and the Sensex declining 559 points. Among sectoral indices, IT stocks were the worst performers, losing over 5%, while selective financial stocks witnessed intraday buying despite the weak overall market sentiment.”

From a technical standpoint, the market faced consistent selling pressure following a weak opening. The formation of a bearish candle on daily charts, along with weak intraday patterns, suggests the possibility of further weakness. However, the short-term market structure remains broadly positive.

“We believe the 50-day Simple Moving Average (SMA) at 25,750/83,500 will act as a crucial support zone for traders. If the market sustains above this level, it may rebound towards 25,900–25,950/84,000–84,200. Conversely, a breakdown below 25,750/83,500 could drag the indices lower towards 25,600–25,500/82,900–82,600,” he added.