IT stocks came under sharp selling pressure on Monday morning, with the Nifty IT index falling 2 per cent or 593 points in early trade to 28,417.70 from its previous close of 29,010.30, amid weak global cues after a steep selloff in US technology and AI-linked stocks.
The weakness in domestic IT counters followed a sharp correction on Wall Street, where technology, semiconductor and AI-related stocks witnessed heavy selling pressure. Market experts said the nearly 5 per cent crash in Nasdaq on June 5 signalled fears that the ongoing AI-driven rally may be losing momentum.
At around 10.30 am, however, the Nifty IT index recovered from the day’s low and traded nearly flat, indicating some buying interest at lower levels.
At 10.45 am, equity benchmark indices also staged a mild recovery from opening losses, with the Sensex trading 566.32 points or 0.76 per cent lower at 73,677.02, while the Nifty 50 was down 178 points or 0.76 per cent at 23,188.70.
Among heavyweight IT stocks, emerged as the top loser, tumbling nearly 6 per cent to ₹187.01, close to its 52-week low of ₹186.50. declined 2.4 per cent to ₹2,144.10.
Other major IT stocks, including , and , also traded in the red. Tech Mahindra was the only stock in the index trading in positive territory.
Devarsh Vakil, head of prime research at HDFC Securities, said the global selloff was largely triggered by steep losses in semiconductor companies after a strong US jobs report increased the possibility of further interest rate hikes by the Federal Reserve.
“This selloff was primarily driven by heavy losses in the semiconductor industry, with major players like Nvidia and Micron seeing sharp drops following a robust May jobs report that increased the likelihood of a Federal Reserve interest rate hike,” Vakil said.
He added that Friday’s market rout wiped out nearly $1.4 trillion in S&P 500 market value after Broadcom’s disappointing AI revenue guidance and stronger-than-expected US labour data reignited fears of prolonged higher interest rates.
Market participants also pointed to concerns around stretched valuations in AI-linked stocks after the Nasdaq plunged around 5 per cent on June 5. Analysts said any cooling in the AI trade could impact sentiment for Indian IT companies, which have been key beneficiaries of the global AI spending theme.