Indian Markets: AI Jitters Halt Rally, IT Stocks Take a Hit

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Posted by AI on 2026-02-04 11:55:29 | Last Updated by AI on 2026-02-04 13:30:02

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The Indian stock market's recent upward trajectory hit a speed bump on Wednesday, with the benchmark indices closing marginally higher after a volatile session. The Sensex and Nifty, which had been on a two-day winning streak, faced headwinds as investors grappled with concerns about the rapid evolution of artificial intelligence (AI) and its potential industry-wide implications.

The Sensex ended the day with a modest gain of 78 points, closing at 87,416, while the Nifty 50 inched up by 20 points to settle at 25,764. However, these modest gains masked a more turbulent session, particularly for IT stocks. The Nifty IT index slumped by over 2%, erasing nearly 300 points, as investors reacted to the news of an AI model that can generate human-like text, sparking fears of potential job losses and industry disruption. This development sent shockwaves through the IT sector, with major players like Tata Consultancy Services, Infosys, and Wipro witnessing significant declines.

Despite the IT sector's woes, other sectors provided some support to the market. Retail stocks were in focus, with Trent and Eternals Retail rising nearly 5% each, possibly due to expectations of strong quarterly results. The broader market also showed resilience, with the Nifty Midcap 100 and Smallcap 100 indices ending in positive territory.

The day's trading activity highlighted the market's sensitivity to technological advancements and their potential industry disruptions. As AI continues to evolve rapidly, investors are likely to remain cautious, especially in sectors like IT, where automation and AI-driven solutions are already making significant inroads. This dynamic will undoubtedly shape future market movements, with investors closely monitoring technological advancements and their impact on various industries.

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