AI Disruption Fears Grip Wall Street, Nifty Snaps Four-Session Winning Streak; IT Index Tumbles More Than 5%

Opening Bell - Morning Commentary - Mr. Devarsh Vakil, Head of Prime Research, HDFC Securities

Wall Street indexes fell sharply on Thursday, with the technology-heavy Nasdaq slumping 2%, as investors intensified their selloff of tech shares and fled transport stocks amid worries about artificial intelligence disruption.

Major tech names fell sharply as concerns mounted about AI's potential to disrupt business models. The Nasdaq dropped 2.03%, while software, real estate, and logistics stocks faced heavy selling pressure as investors reassessed profit outlooks.

Despite beating earnings and revenue estimates, Cisco crashed 12% on disappointing forward guidance and margin pressure from rising memory costs.

Anthropic has raised $30 billion in its latest funding round, more than doubling the Claude chatbot maker's valuation to $380 billion and underscoring massive investor interest in the startup and the broader AI industry.

The S&P 500 and the Dow sank more than 1% as investors also digested the latest jobs data and awaited the January inflation report, due today.

Strong January jobs data pushed back bets on a Fed rate cut, with odds of a June cut dropping to 60% from 75%. Markets are bracing for today's CPI report, expected to show 2.5% annual inflation, well above the Fed's 2% target.

Asian shares retreated from record highs on Friday as worries about shrinking margins in the tech sector prompted investors to seek safe-haven bonds ahead of key U.S. inflation data.

The yen was set for its best week in almost 15 months on Friday, having climbed steadily after Japanese Prime Minister Sanae Takaichi's historic election win allayed investor worries about the nation's fiscal health.

The bulls took a breather as Nifty 50 snapped a four-session winning streak, sliding 146 points to finish at 25,807.

The Nifty IT Index was the primary casualty, plunging 5.5% to a ten-month low. This sharp fall in IT stocks, followed by a global sell-off in software stocks, was fueled by mounting concerns that AI startups are disrupting the business models of established tech companies.

Nifty failed to surpass the crucial resistance of 26000 and closed below its 5 DEMA, currently placed at 25817. The 50-day EMA for Nifty is at 25685, which can act as immediate support. For bullish momentum to return, the Nifty must clear the 26000 hurdle.

Indian markets are poised to open subdued on softer global cues.

Source : Equity Bulls

Keywords

OpeningBell MarketCommentary Nifty WallStreet AIDisruption ITIndex HDFCSecurities