The Indian stock market crash intensified on Thursday, February 12, as the benchmark indices witnessed a sharp sell-off during early trade. The Sensex tumbled over 350 points, while the NIFTY50 slipped below the critical 25,850 mark. This downward trend was primarily fueled by heavy losses in the IT sector, with industry leaders like Infosys and TCS leading the retreat ahead of the weekly F&O expiry.
Heavyweights Drag Indices Lower
The domestic equity market opened under significant pressure, with the SENSEX touching an intraday low of 83,843. Meanwhile, the NIFTY50 dropped to 25,828, reflecting a broader cautious sentiment among investors. The volatility comes at a crucial time as traders adjust their positions before the expiry of Sensex futures and option contracts.
Market analysts point out that the concentration of selling in index heavyweights has made the recovery difficult. Stocks such as HDFC Bank, Mahindra & Mahindra, and Tech Mahindra joined the IT giants in the laggards list. This collective slide has dampened the bullish momentum seen in previous weeks, leaving investors looking for stable support levels.
AI Disruption Fears Hammer IT Stocks
The most striking feature of today’s Indian stock market crash is the “bloodbath” in the IT sector. The NIFTY IT index plummeted by 4.5%, reflecting a deeper anxiety within the global tech landscape. Investors are increasingly concerned about the potential disruption AI startups might cause to established software service firms.
This is not a sudden trend; the NIFTY IT index has already slid over 10.5% year-to-date. The rapid evolution of generative AI is forcing a re-evaluation of traditional outsourcing models. Companies like Infosys saw their share price drop nearly 5% to ₹1,399, while Wipro and HCL Technologies also faced intense selling pressure from institutional investors.
Global Cues and US Macro Data
The domestic sentiment was further influenced by mixed signals from international markets. While Asian stocks briefly touched record highs, the strength of the US dollar has created a ripple effect. Stronger-than-expected US jobs data has effectively pushed back expectations for a near-term interest rate cut by the Federal Reserve.
The US economy added 1,30,000 jobs in January, a figure that initially boosted Wall Street but later led to concerns over persistent inflation. As the dollar firms against major currencies, emerging markets like India often face capital outflows. Traders are now closely watching the upcoming US inflation report, which will likely dictate global market direction for the rest of the month.
Midcaps and Smallcaps Underperform
While the headlines focus on the Sensex, the broader market pain is even more evident. The NIFTY Midcap 100 and NIFTY Smallcap 100 indices fell by 0.77% and 0.85% respectively. This underperformance suggests that the selling pressure is not restricted to just large-cap stocks but is spreading across the board.
The market breadth remains extremely negative. On the National Stock Exchange (NSE), nearly 1,903 shares were declining compared to only 767 advancing stocks. This ratio indicates a lack of buying conviction at lower levels, as retail investors remain wary of the current volatility.
Contrarian Buying in Banking and FMCG
Despite the overarching Indian stock market crash, certain pockets of the market showed resilience. Select banking and FMCG (Fast-Moving Consumer Goods) shares witnessed buying interest, providing some cushion to the falling indices. ICICI Bank, State Bank of India, and Bajaj Finance featured among the top gainers.
Additionally, Eicher Motors and Bharat Electronics managed to trade in the green. Defensive sectors like FMCG often attract capital during periods of high volatility in growth-oriented sectors like IT and Tech. This sector rotation suggests that while some investors are exiting tech, they are reallocating funds to value-oriented stocks.
Impact on Investor Wealth
The combined market capitalization of listed companies saw a significant erosion within the first hour of trade. For retail investors, the sharp drop in IT stocks is particularly concerning given the heavy weightage these stocks hold in most portfolios. Professional traders are advising caution, suggesting that the “buy on dips” strategy may need to be applied selectively until the Nifty stabilizes above the 26,000 level.
The upcoming inflation data from the US and the domestic industrial production figures will be the next major triggers. Until then, the market is expected to remain in a “sell on rise” mode, with technical resistance seen at higher levels for both the Sensex and Nifty.
To learn more, follow Shabdsanchi’s social media pages today and stay updated.
- Facebook: shabdsanchi
- Instagram: shabdsanchiofficial
- YouTube: @shabd_sanchi
- Twitter: shabdsanchi