Panic on D-Street: Sensex Crashes 1,069 Points, Nifty Below 25,450 as IT Stocks Fall, Wiping Out ₹5 Lakh Crore.

In a surprising reversal of Monday’s gains, the Indian stock market witnessed a severe sell-off on Tuesday, with the benchmark indices sliding down over 1% in a session marked by widespread sell off panic. The BSE Sensex crashes by 1,068.73 points (1.28%) to settle at 82,225.92, while the Nifty 50 tumbled 288.35 points (1.12%) to close at 25,424.65. This volatile market session erased investor wealth
by a staggering nearly ₹5 lakh crore, tumbling the total market capitalization of BSE-listed firms significantly down.

The panic was predominantly led by a historic crash in Information Technology (IT) stocks like IBM, coupled with renewed global trade tensions triggered by former US President Donald Trump and anticipating geopolitical uncertainty in the Middle East region.

1. The AI Disruption Anxiety (The “Anthropic – Clude Code” Effect)

The IT sector, a long-time favorite of D-Street, is facing human redundancy in an AI age. The Nifty IT index plunged nearly 5% to hit a 30-month low, extending its losing streak to the fifth consecutive session. The trigger for this meltdown was a fresh salvo from the AI frontier. Anthropic, an AI startup, announced that its new tool, Claude Code, can map dependencies in quarters instead of years across systems written in COBOL—an old programming language that still runs the backbone of global financial systems, including 95% of ATM transactions in the U.S.

This sparked fears that Indian IT giants, which earn a significant chunk of their revenue by maintaining and modernizing such legacy systems for Western and American clients, face a 14%-16% gross deflationary risk to their revenues over the next few years, according to HSBC Global Investment Research . IT Heavyweights like Tech Mahindra (down 6.3%), HCL Tech (down over 5%), Infosys, and TCS (down 3-4%) were shattered in the sell-off.

2. Trump’s Tariff Turmoil Returns

Just as markets were recovering from previous tariff woes, Donald Trump stoked trade war fears. Following the U.S. Supreme Court striking down his earlier emergency tariffs, Trump took to Truth Social to issue a stark warning. He freshly imposed a 15% global tariff under Section 122 of the Trade Act of 1974, cautioning countries against “playing games” with trade deals. This trade uncertainty has frozen global trade sentiments, with the EU putting its approval process on ice and India pausing planned trade talks with the U.S.

3. US-Iran Geopolitical Risk & Crude Oil Surge

Adding fuel to the fire, rising tensions between the U.S. and Iran pushed crude oil prices to a seven-month high. As a net importer of oil, rising crude prices widen India’s current account deficit and fuel inflation, putting immense pressure on the Rupee and trade margins.

4. Technical Factors: F&O Expiry

The sell-off was worsen by the weekly expiry of Nifty derivatives. This period typically sees heightened uncertainty as traders roll over or square off their positions, with option writers anchoring prices near key levels, leading to sharp intraday moves.

Sectoral Impact: IT Bleeds, Metals Shine

IT Sector (Worst Hit): The Nifty IT index is now headed for its steepest monthly fall since 2003, plunging 21% so far in February. All entities are in share market territory, down over 20% from their recent highs . Selling pressure also spread to new-age tech stocks like Eternal and Paytm, which closed with sharp cuts.

The Gainers: Amid the down fall, the Nifty Metal index stood resilient, hitting a fresh all-time high. Pharma and Healthcare stocks also managed marginal gains, while PSU Banks displayed relative strength .

Broader Market: The pain was not limited to large-caps. The BSE MidCap and SmallCap indices also fell over 0.5%-1%, reflecting a broad-based risk cautious.

What Should Investors Do? Analyst Outlook

With the Nifty slipping below the crucial 25,450 mark, market technicians are eyeing the next support level.

Vishnu Kant Upadhyay of Master Capital Services Ltd. noted, “Overall market sentiment remains anxious. The 25,250 zone, which coincides with the 200-day EMA, will be a crucial level to monitor. A sustained hold near this support could trigger some short-covering bounce in the near term.”

Despite the falls, VK Vijayakumar of Geojit Investments pointed out a positivity: Foreign Institutional Investors (FIIs) have turned buyers in 10 out of the last 17 trading sessions, indicating fresh interest in India driven by improving corporate earnings. He suggests that sectors like capital goods and financials may remain resilient, while IT is likely to continue facing headwinds.

Today’s crash serves as a stark reminder of the fragile global economic scenario, where technological disruption and geopolitical tensions can erase billions in market cap within hours.