Mumbai: Benchmark equity indices Sensex and Nifty tumbled over 1 per cent in early trade on Friday, dragged down by steep losses in IT stocks amid weak global cues and persistent concerns over artificial intelligence-led disruptions.

The 30-share BSE Sensex tanked 883.4 points, or 1.05 per cent, to 82,791.52 in early deals, while the 50-share NSE Nifty dropped 262.60 points, or 1.02 per cent, to 25,544.60.

Technology stocks extended the brunt of the selling pressure from the previous session. Heavyweights such as Infosys, Tata Consultancy Services, HCL Technologies and Tech Mahindra were major laggards on the Sensex.

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Other major decliners included Hindustan Unilever, Adani Ports, Trent, Tata Steel, Reliance Industries, IndiGo, Larsen & Toubro, UltraTech Cement, and NTPC. Only Bajaj Finance, HDFC Bank, and Bharti Airtel managed gains.

The BSE SmallCap Select Index fell 1.93 per cent, while the MidCap Select Index dropped 1.40 per cent.

"Markets have fallen into a turbulent phase, which will cause some panic among investors even while offering opportunities. The sell-off in AI stocks in US markets was expected, but the timing and extent of the sell-off were not known.

"For the Indian market, this correction in AI stocks is a positive, because last year's global rally was primarily an AI trade in which India, an AI laggard, couldn't participate. So the unwinding of the AI trade, if it persists, is a positive from the Indian perspective," VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.

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He added, "What is rattling the Indian market now is the massive sell-off in IT stocks, which is the second largest profit pool of India Inc. The real impact of the 'Anthropic shock' on the IT sector is yet to be ascertained".

Asian markets were mixed, with Hong Kong's Hang Seng, Japan's Nikkei 225, and Shanghai's SSE Composite trading lower, while South Korea's Kospi was in the green.

US equities ended lower on Thursday, with the Nasdaq falling 2 per cent as investors intensified tech selloffs amid concerns about AI disruption.

"Wall Street indexes fell sharply on Thursday, with the technology-heavy Nasdaq slumping 2 per cent, as investors intensified their selloff of tech shares and fled transport stocks amid worries about artificial intelligence disruption," Devarsh Vakil, Head of Prime Research, HDFC Securities, said.

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He noted that major tech names fell sharply as concerns mounted about AI's potential to disrupt business models.

Meanwhile, Foreign Institutional Investors bought equities worth Rs 108.42 crore on Thursday, while domestic institutional investors were net buyers of Rs 276.85 crore. Brent crude slipped 0.16 per cent to USD 67.41 per barrel.

Why IT stocks are under pressure

AI fears: Advanced AI systems capable of executing entire workflows have intensified worries over "seat compression," or reduced staffing needs. Indian IT firms, traditionally reliant on billing hours, face risks to their revenue model. Anthropic’s Claud Cowork and a new tool from Algorhythm Holdings have already caused market jitters.

Billing model transition: Analysts warn clients might shift from time-and-material contracts to outcome-based pricing. While efficient in the long term, markets fear temporary revenue dips as tech companies recalibrate pricing.

Valuation correction: After a late 2025 rally driven by AI optimism, many IT stocks traded at elevated valuations. The current risk-off environment is triggering profit-booking, particularly in firms without a clear near-term AI monetisation roadmap.

Global tech layoffs: Over 80,000 tech employees were laid off globally in the first 40 days of 2026, including at Amazon and Salesforce. Investors see this as a structural shift toward automation and AI efficiency rather than routine cost-cutting.

Ajay Bagga, Banking and Market Expert, told ANI, "Indian futures are pointing to another 0.5 per cent cut in the leading indices this morning as global risk-off sentiment impacts Indian stocks as well. In aggregate, the key themes this morning across Asia include. Equities are under pressure with broad declines as U.S. risk-off sentiment carries over to Asia. Tech sector weakness is dominating sectoral performance, amplified by AI valuation repricing and AI disruption threats leading to Saas stocks selling off".

He added, "Bond yields lower globally, reflecting growth concerns and weak housing demand in the U.S. U.S. dollar losing some safe-haven drive, though movements remain mixed across crosses. Yen appreciation, reflecting safe-haven flows and relative rate dynamics. Oil prices are sliding on softer global demand forecasts, reinforcing risk-off sentiment. Market participants will be closely watching upcoming U.S. CPI data, which could either confirm the slowdown narrative or provoke further repricing in bond yields and equities".