Tech stocks slide on AI fears, oil gives Dalal Street a headache
MUMBAI: Fresh flare ups in the Persian Gulf region on Wednesday pushed up crude prices to near the $100 per barrel level and sank the rupee by around 50 paise in intra-day trades. These factors combined to pull the sensex down by over 1,100 points by mid-session, before some buying emerged at lower levels. At close, with demand for banking and telecom stocks, the index was 304 points down at 74,346 points.Most IT stocks crashed as fresh fears related to the impact of AI-led technology disrupting established business models of software services companies surfaced.
According to Vinod Nair of Geojit Investments, domestic markets witnessed a swift recovery from initial losses despite escalating Iran-US tensions. “The rebound was primarily driven by a sharp recovery in banking stocks, while IT stocks emerged as the biggest laggards due to profit booking and persistent global uncertainties. Expectations of supportive policy measures to boost foreign investments aided sentiment.“However, Nair said investors remained cautious ahead of the upcoming RBI policy decision and GDP data, both slotted for Friday. They are expected to provide further clarity on growth challenges amid the risk of inflationary pressures stemming from geopolitical tensions.The day’s selling on Dalal Street was again led by foreign funds with the net outflow from stocks at Rs 5,617 crore, data showed. In contrast, domestic funds were net buyers at Rs 5,741 crore. Wednesday’s session also left investors poorer by about Rs 1.6 lakh crore with BSE’s market capitalisation now at Rs 461.1 lakh crore.IT stocks were at the forefront of the selling. Sector leader TCS crashed 8.4% while Tech Mahindra lost 6.2%, HCL Tech 5.3% and Infosys closed 3.8% down. As a result, the BSE’s IT index closed 5% lower. Banking stocks showed smart gains with SBI up 1.4% and ICICI Bank up 1.3%, while BSE’s banking index closed 0.9% up.In the forex market, after the initial slide, the rupee recovered some ground in late trades and closed 43 paise weaker at 95.7 per dollar. In late trades, Brent crude was up nearly 2% at $97.7/barrel. Earlier in the day, it touched the $99 mark. In the international bullion market, gold was down 1.2% at $4,467/ounce while silver was trading 2.7% lower at $73.5/ounce.
