Indian IT stocks experienced a sharp decline, with the Nifty IT index tumbling 3.7% to near 3-year lows amid intensified concerns over AI-led disruption to traditional IT services models. According to latest reports from Business Standard, the sector's weighting in the index has slipped to 10.2% from its peak of 17.7%, highlighting the significant impact of AI transformation on the industry. The decline was triggered by OpenAI's acquisition of consulting firm Tomoro, which has intensified fears about AI-driven automation affecting traditional IT services. Coforge, Infosys, Mphasis and Tata Consultancy Services (TCS) slipped over 3% in recent trading sessions, reflecting widespread investor concerns about the sector's future prospects.
Indian benchmark indices staged a remarkable recovery on Monday, erasing sharp early losses to end largely flat despite escalating Middle East tensions. According to reports from Business Standard, the Sensex tumbled as much as 1,058 points, or 1.4 per cent, to an intra-day low of 74,180 before settling at 75,315, up 77 points, or 0.1 per cent. The Nifty 50 slipped to 23,317 in opening trade before closing nearly unchanged at 23,650, up 6.5 points, or 0.03 per cent. The recovery was driven by a rebound in IT stocks and continued positive flows from foreign portfolio investors, with BSE Sensex closing at 75,315.04, up 77.05 points or 0.10 per cent and Nifty 50 ending at 23,649.95, up 6.45 points or 0.03 per cent. As per CNBC TV18, the market witnessed sharp intraday swings with the Sensex opening at 74,807.97 and touching an intraday high of 75,466.60 before falling to the low of 74,180.26.
The Nifty IT index climbed 2.43 per cent, with all constituents ending in the green, after slumping nearly 6 per cent last week. As reported by Business Standard, analysts attributed this recovery to the sharp depreciation in the rupee and strength in the dollar, which improved the earnings outlook for export-oriented software companies. According to CNBC TV18, Tech Mahindra jumped 4.97 per cent, while Infosys gained 2.47 per cent, with HCL Tech and TCS also ending higher. The IT sector's strong performance helped offset broader market weakness and contributed significantly to the overall market recovery. Bharti Airtel, Bajaj Finance, Sun Pharma, Kotak Bank, Titan, ICICI Bank and HDFC Bank were among other major gainers, highlighting the sector's dominance in the volatile trading session.
While IT stocks led gains, several heavyweight counters faced selling pressure during the volatile session. Tata Steel fell 3.09 per cent, Power Grid declined 2.89 per cent, and SBI and NTPC dropped over 2 per cent each. As per CNBC TV18, Nifty Media, PSU Bank, Auto, Metal and Consumer Durables indices ended in the red, while Nifty Bank closed down 0.32 per cent and Nifty Financial Services ended nearly flat. Broader markets remained under pressure with Nifty Smallcap indices falling between 1.21 per cent and 1.49 per cent, while Nifty Midcap indices closed marginally lower. However, midcap and smallcap stocks showed relative stability compared to large-cap volatility, according to market experts.
FPIs remained net buyers, pumping ₹2,813 crore into domestic equities, while domestic institutional investors (DIIs) bought shares worth ₹2,682 crore. According to CNBC TV18, foreign institutional investors (FIIs) supported the market by buying at lower levels in the past two sessions, providing crucial support to the recovery. The rupee touched a fresh low near 96.25 against the US dollar, adding further pressure on sentiment. Bank Nifty witnessed strong movement during the session and filled a previous gap formed earlier in April, moving into the 52,780–52,800 zone. Key support lies in the 23,265–23,375 zone for Nifty 50, while resistance is seen near 23,650–23,750, with a move above 23,850 indicating a return of strong bullish momentum. As per CNBC TV18, crude oil prices remained elevated and continued to rise gradually, adding to market concerns about potential further increases.
Despite the recovery, market analysts remain cautious about the sustainability of current levels amid mixed global cues and intensified AI disruption concerns. Seshadri Sen from Emkay Global warned that a prolonged Gulf conflict could aggravate India's macroeconomic vulnerabilities through elevated oil prices and balance-of-payments pressure. According to CNBC TV18, overall market movement was driven by a mix of global weakness and selective domestic support, while FIIs buying, IT sector strength and technical gap filling helped the market recover from lower levels. The combination of slowing growth, widening external-sector stress, and sticky inflation could complicate monetary policy, as noted by Business Standard. The Nifty Smallcap 100 index fell 1.3 per cent and the Nifty Midcap 100 index slipped 0.2 per cent, highlighting persistent risk aversion beyond frontline shares, while the Nifty IT's decline to near 3-year lows underscores the sector's vulnerability to AI transformation pressures.
