Indian equity markets closed sharply lower on Thursday, February 12, as heavy selling in information technology stocks dragged benchmark indices down and snapped a brief phase of consolidation seen earlier in the week. Weak global cues and sector-specific concerns combined to dampen investor sentiment through the session.
The BSE Sensex ended the day deep in the red, shedding 558 points, while the Nifty 50 slipped below the 25,850 mark by the close. Selling pressure intensified in the second half of trade, with declines broadening beyond a few large stocks to weigh on overall market breadth. The sharp fall wiped out significant investor wealth, with the overall market capitalisation of BSE-listed companies eroding by several lakh crore rupees in a single session.
IT stocks were the clear laggards, leading the market lower as worries resurfaced over slowing global tech spending, heightened competition from artificial intelligence-driven platforms and reduced expectations of an early interest rate cut by the US Federal Reserve. Heavyweights such as Infosys, TCS, HCL Technologies and Tech Mahindra witnessed sharp declines, pulling the Nifty IT index to its weakest levels in several months. The sustained pressure on technology stocks overshadowed relative stability in some other sectors.
"The Nifty IT index emerged as the biggest laggard, plunging nearly 6% in trade. Heavyweights such as Infosys, TCS, Wipro, Tech Mahindra and HCL Tech led the decline, exerting significant pressure on the benchmark indices. The selloff was triggered by intensifying concerns around AI-led disruption and the potential impact on traditional outsourcing revenue models," said senior stock analyst and CEO at brokerage and wealth tech firm Enrich Money, R Ponmudi.
He added that rapid advancements in enterprise-grade AI tools capable of automating coding, analytics, legal drafting, and business workflows are prompting investors to reassess long-term growth assumptions for labor-intensive IT services. Additionally, stronger-than-expected US jobs data reduced expectations of near-term Federal Reserve rate cuts, raising concerns that discretionary IT spending from US clients may remain subdued, he said.
Beyond IT, sentiment remained cautious across most segments of the market. Mid-cap and small-cap stocks also closed lower, indicating a broad-based risk-off mood rather than a narrow sectoral correction. While select banking and consumer stocks showed resilience at various points during the session, their gains were insufficient to counter the drag from technology shares and overall profit-taking.
Market participants said Thursday’s decline reflected a reassessment of risk after recent gains, with investors turning defensive amid uncertain global cues. Concerns around US monetary policy, mixed corporate earnings visibility in export-oriented sectors and lingering valuation worries contributed to the cautious tone.
According to Ponmudi, select stocks in the banking and financial services sector also came under pressure following the Reserve Bank of India’s draft guidelines aimed at curbing mis-selling of financial products. The proposed norms tighten suitability assessments, restrict forced bundling and misleading practices, and introduce refund and compensation provisions where mis-selling is established. While these measures strengthen consumer protection and long-term trust in the financial system, markets reacted cautiously due to potential short-term impact on fee-based income streams, particularly bancassurance, he says.
A market analyst with a foreign brokerage noted that the sharp fall has interrupted the market’s recent attempt to stabilise, and near-term movements are likely to remain sensitive to global developments and sectoral earnings signals. While domestic economic fundamentals continue to offer longer-term support, Thursday’s session highlighted the market’s vulnerability to global headwinds and sharp sector-specific sell-offs, he said.