Heavyweights Infosys, TCS, HCLTech and Wipro emerged as key laggards. The sharp decline eroded about Rs 4.62 lakh crore in investor wealth, pulling total BSE market capitalisation down to around Rs 467 lakh crore.
The BSE Sensex opened 800 points lower by 1% at 82,903, while the Nifty 50 was down 236 points to start the day at 25,571 or 0.9% lower.
Here are major reasons why bears have taken over Dalal Street:
1.) IT Selloff
The sell-off in IT stocks deepened for a second straight session after ADRs of Infosys and Wipro plunged nearly 10% overnight. In Friday’s trade, the Nifty IT index slumped more than 4%, extending its two-day fall to almost 10%. Heavyweights including TCS, Infosys, Wipro, Tech Mahindra, HCLTech and Mphasis also declined 4–6%, reflecting broad-based weakness across the sector.
Bearish sentiment intensified after U.S.-based AI startup Anthropic unveiled a new enterprise-focused tool aimed at corporate legal teams. The company — known for its Claude chatbot — said the platform can automate a range of functions such as contract reviews, non-disclosure agreement triage, compliance workflows, legal brief preparation and standardised responses, raising concerns over the long-term demand outlook for traditional IT services.
“Tech stocks, reeling under the Anthropic shock, are unlikely to recover soon,” warned V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited. He added that Indian IT may continue to face pressure in the near term, while a rotation of capital toward stronger-performing sectors could support stocks outside the technology space.
2.) Weak global equity markets
Wall Street ended sharply lower on Thursday, led by a steep selloff in technology stocks as investors grew increasingly concerned about the disruptive impact of artificial intelligence on earnings visibility and sector margins.
The tech-heavy Nasdaq tumbled about 2%, while broader markets also came under pressure as investors assessed fresh labour market data from the United States and positioned ahead of the closely watched January inflation report. The Dow Jones Industrial Average fell 669.42 points, or 1.34%, to 49,451.98, the S&P 500 declined 108.71 points, or 1.57%, to 6,832.76, and the Nasdaq Composite dropped 469.32 points, or 2.03%, to 22,597.15.
Asian markets followed Wall Street lower on Friday, retreating from recent record highs as concerns over margin pressures in the technology sector weighed on heavyweights such as Apple. Investors also shifted toward safe-haven assets ahead of key U.S. inflation data. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.6%, though it remained up 4.1% for the week, while Japan’s Nikkei index slipped 0.9% but was still higher by 5.3% on a weekly basis.
3.) Dollar strength, weak rupee
A strengthening U.S. dollar, which has risen for a third straight session to 96.93, along with a weaker rupee, which opened 0.1% lower at 90.67 per U.S. dollar versus 90.59 previously, is generally negative for equities as it can trigger foreign fund outflows from emerging markets like India toward safer assets in the United States.
4.) Weak technical set up
Nifty ended lower on Thursday, breaking out of its recent consolidation band and forming a short-term lower high–lower low sequence. The 26,000 zone remains a strong overhead supply area, reinforced by heavy call writing and repeated rejection. Immediate support has shifted to 25,700. Below this, the 25,650–25,550 zone becomes critical as it aligns with the 20-day and 100-day EMAs — making it an important structural cushion. As long as this broader support band holds, the overall trend remains mildly constructive despite short-term weakness.
“Momentum indicators are signalling caution. RSI has cooled, and upside strength is fading. A decisive breakdown below 25,700 may extend the decline towards 25,600 or lower levels. On the upside, only a sustained move above 25,900–26,000 can revive bullish momentum, potentially pushing the index towards 26,100–26,300,” Ponmudi R, CEO of Enrich Money, said.
5.) Geopolitical tensions linger
Rising tensions in the Middle East have kept markets on edge after US President Donald Trump warned of possible action against Iran if a nuclear agreement is not reached, even as diplomatic negotiations continue. Adding to uncertainty, Trump said he is considering deploying a second aircraft carrier to the region as Washington and Tehran prepare to resume negotiations. Earlier this week, he cautioned that Iran could face “something very tough” if it fails to meet US demands. Tehran has signalled a willingness to place limits on its programme in exchange for sanctions relief, while rejecting broader demands beyond the nuclear issue.
