Due to strong selling in IT shares and poor signals from US markets, the benchmark equity indices, the Sensex and Nifty, fell on Thursday.
The broader Nifty quoted at 25,816.30, down 137.55 points or 0.53 percent, while the Sensex fell 518.38 points or 0.62 percent at 83,715.26, continuing the decline from the previous day.
The Nifty50 pack’s biggest laggards, Tech Mahindra, Infosys, and Wipro, had drops of up to 5%, while State Bank of India and Bajaj Finance saw increases of up to 2%. With roughly 1468 shares rising, 2011 shares falling, and 175 shares remaining constant, the market breadth was negative.
Key factors behind market decline
- Selling in IT shares: After better than expected US jobs statistics for January reduced expectations of an early rate drop by the US Federal Reserve, shares of Indian IT companies plummeted precipitously, following losses in their Wall Street rivals. Sentiment was also affected by worries about disruptions brought on by artificial intelligence.
The index has dropped almost 11% so far in 2026 after dropping 12.6% in 2025 due to worries that changes brought forth by AI may affect software services companies’ profits.
Vinit Bolinjkar, Head of Research at Ventura Securities, told Reuters, It’s a mix of knee jerk reaction and concerns over real threat to IT. AI automation targets labour-heavy models at top Indian IT firms, slashing billable hours and headcount, he added.
Following steep drops in the ADRs of top Indian IT companies in the US, VK Vijayakumar, Chief Investment Strategist at Geojit Investments, stated that tech stocks are unlikely to rebound anytime soon.
The Fed may not be cutting rates anytime soon, according to the most recent US jobs data, which shows that 1,30,000 new jobs were added last month and that unemployment dropped to 4.3%. Since GDP is strong and inflation is predicted to gradually return to the RBI’s long-term target by the end of FY27, it looks as though the rate cutting cycle is finished in India as well, according to Vijayakumar.
- Crude rises: Amid worries about growing tensions between the US and Iran, oil prices slightly increased. The benchmark for world oil, Brent crude, increased 0.46 percent to USD 69.72 a barrel. India, a significant oil importer, views rising crude prices negatively since they can increase inflationary pressures and the trade deficit.
- Weak global cues: The Hang Seng index for Hong Kong was down in Asia. On Wednesday, U.S. markets ended the day lower.
Technical outlook
The Nifty is still trading above important moving averages and maintaining its upward trend. Near the 26,000 level, immediate resistance is observed. If the index rises above this, it may reach its all time high of 26,373.
According to Devarsh Vakil, Head of Prime Research at HDFC Securities, the 25,700-25,780 range is anticipated to provide support on the downside.
Rupee’s weakness against the dollar
The rupee finished Thursday at 90.3550 to the dollar, up 0.1% from the previous session, according to news agency Reuters.
The dollar index, meanwhile, increased by almost 0.25%, sparking worries that a stronger currency may stifle enthusiasm for the trade agreement between the US and India.
A new wave of FII purchases in Indian stocks was spurred by this confidence, but a stronger dollar could drive foreign investors away from home markets once more.
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In the meantime, dollar rupee forward premiums kept declining this week, according to Reuters. For the first time in almost a month, the one year expected yield fell to 2.39%. Over the past week, it has dropped by roughly 20 basis points.
