The broader US tech rout added to the pressure, as the Nasdaq Composite dropped over 300 points, or more than 1%. Around 11:11 AM ET (9:43 PM IST), the Nasdaq was trading at 22,764.90. The S&P 500 was down 0.6% at 6,902.80, while the Dow Jones Industrial Average slipped 249.27 points, or 0.50%, to 49,872.10.
Cisco tanked 11% while heavyweights including Apple, Nvidia and IBM were down up to 6% around this time.
Earlier today, Indian benchmark indices ended with sharp cuts dragged by tech stocks. The Nifty IT index settled 5.5% lower with all 10 stocks slipping into the red.
Panic selling swept through India’s technology sector today with the combined market capitalisation IT stocks eroding by Rs 1.3 lakh crore. Persistent fears of AI-led disruption in the sector and compounded by stronger-than-expected US jobs data that dimmed hopes of near-term interest rate cuts triggered the fall.
Nifty IT is the worst performing index, plunging 21% over the past 12 months.
Vinod Nair, Head of Research Geojit Investments said today’s decline in Indian IT stocks was driven by stronger-than-expected US employment data, with a marginal decline in the unemployment rate, which has reduced expectations of an early rate cut by the US Federal Reserve. This pressure was further compounded by ongoing concerns around AI-led disruption in the sector, he said.On the AI-related fears, Nair said that AI is creating a structural shift in Indian IT services by reducing timelines and automating tasks, putting pressure on the traditional headcount-based outsourcing model.
“Layoffs are likely in routine-heavy areas as fewer people will be needed to deliver the same outcomes. Even ERP implementation, as highlighted by Palantir’s recent focus, is now vulnerable to AI disruption. Clients are shifting toward outcome-based pricing. In the coming quarters, AI adoption could create headwinds for deal wins, potentially impacting topline, making close monitoring of deal flow essential to assess its real impact,” he warned.