A decline is being seen in the stock market today, Friday. This decline continues. At around 11:45 am, the Sensex was trading 813 points down at 82,861. Nifty was also trading around 25,550, down 252 points or 0.98%. The country’s IT sector is facing a huge recession. Due to rapidly growing AI capabilities, the market cap of big IT companies like TCS and Infosys is declining significantly. IT stocks witnessed a sharp decline today, especially companies like Infosys and TCS, which fell by around 6% each.
Market cap lost ₹6 lakh crore in 8 days
The IT sector, worth $250 billion, is going through a very difficult time. According to the data, investors have suffered a loss of approximately ₹6 lakh crore in the last 8 trading sessions. In the last eight days, Infosys has fallen 21%, TCS 19% and HCL Tech 17%. The market cap of TCS has fallen below the level of October 2020 to less than ₹10 lakh crore. Meanwhile, Nifty Metal and Nifty Realty are seeing a decline of more than 3%. Among metal stocks, Hindalco and National Aluminum fell around 5% each. In realty, DLF and Godrej Properties are trading down around 4%. Despite stellar results and orders worth over ₹2,300 crore, HAL shares have not seen much of a rise. As of 11:50 am, it had seen an increase of only 2%. Other stocks are performing poorly. However, the question is, what are the reasons behind this decline in the stock market?
Fear of new AI tools in US, in which anthropic activity is a big factor
In the last few days, concerns about AI have increased in the US. Selling was seen in AI stocks in the US. Anthropic, the American AI startup that has disrupted the global job sector with cloud coworking, is one reason why. There are fears that new AI tools could disrupt traditional IT services businesses. The growing power of Artificial Intelligence (AI), especially Anthropic’s Cloud 4.6, has raised questions about the traditional outsourcing model. The market fears that the advent of AI will significantly reduce jobs and working hours (headcount-based billing) in IT companies.
Impact of AI in US, impact in India too
The Dow Jones Industrial Average fell 669 points (1.34%) to 49,451.
The tech-based Nasdaq Composite index fell 2.03% to 22,597.
The S&P 500 index fell 108 points (1.57%) to 6,832.
Since Indian IT companies have many clients in the US from which they get a lot of revenue, their services are also likely to be affected. As a result, the decline in the US market is also affecting the Indian IT sector stocks. Selling continues in IT stocks.
condition of domestic market
The Indian Stock Market (BSE) is in a very weak condition right now. The market is in complete recession. Nearly 2,500 stocks are trading with losses, while the number of stocks making gains is less than 1,000. According to NDTV Profit, today 118 stocks fell to their 52-week low. There was such heavy selling in 62 stocks that lower circuits were imposed in them (trading was stopped).
Look at US inflation data
Investors around the world are closely watching the US inflation data (CPI data). Amid this uncertainty, bond yields are falling. US 10-year Treasury bond yields have fallen to 4.10%. According to Bloomberg, investors have shown keen interest in buying 30-year government bonds.
Should this be considered a buying opportunity?
JP Morgan has called it a buying opportunity. He says that IT companies are the “plumbers of the technology world” and they will remain in demand even with the advent of AI. The market value is declining significantly. Investors are questioning the future of the traditional outsourcing model. Next week’s session will reveal whether the worst is over for these stocks or not.
