Sensex, Nifty post moderate gains as IT stocks plunge over ‘SaaSpocalypse’

Mumbai, Feb 4: The Indian equity markets posted moderate gains on Wednesday morning with broad-based gains across sectors, weighed down by losses in IT stocks due to AI-driven ‘SaaSpocalypse’.

The Indian IT stocks plummeted tracking negative Wall Street cues over steeper competition and lower margins, stemming from AI advancement, after the latest launch of a legal tool by Anthropic for its Claude AI chatbot.

As of 9.25 am, Sensex added 44 points, or 0.05 per cent, to reach 83,783, and Nifty gained 51 points, or 0.20 per cent to settle at 25,778.

Main broad-cap indices posted moderate gains, as the Nifty Midcap 100 edged up 0.04 per cent, and the Nifty Smallcap 100 inched up 0.01 per cent.

All major sectoral indices were in green except IT and realty, down 5.39 per cent and 0.58 per cent, respectively. Nifty auto, metal, consumer durables as well as oil and gas were the major gainers up 1.12 per cent, 1.38 per cent, 1.05 per cent and 1.77 per cent, respectively.

Immediate support for Nifty lies at 25,550-25,600 zone, while resistance is anchored at 25,850–25,900 zone, market watchers said.

Analysts forecast the rally fuelled by the US-India trade deal will face hurdles to sustain, adding that IT selloff in the US on Tuesday could drag the Indian IT index.

India is a major software service provider for many US companies. As software stocks on Wall Street plunged up to 25 per cent, after the new Anthropic AI launch, analysts noted that Jefferies has gone on to call it a “SaaSpocalypse”.

Across most sectors, since valuations continue to be high there is no fundamental support for a sustained rally, market watchers said, adding that the monetary policy meeting scheduled on February 6 will likely keep rates unchanged.

The rally seen on Thursday was mainly driven by FII short covering. The sectors that are expected to gain from exports to the US, like textiles and apparels, gems and jewellery and marine processing, will witness some more price action, they added.

In Asian markets, China’s Shanghai index was flat, and Shenzhen eased 0.88 per cent, Japan’s Nikkei lost 0.6 per cent, and Hong Kong’s Hang Seng Index edged down 0.73 per cent. South Korea’s Kospi added 0.72 per cent.

The US markets ended largely in the green in the last trading session as Nasdaq eased 1.43 per cent. The S&P 500 declined 0.84 per cent, and the Dow Jones lost 0.34 per cent.

On February 3, foreign institutional investors (FIIs) net bought equities worth Rs 5,236 crore, while domestic institutional investors (DIIs) were net buyers of equities worth Rs 1,014 crore.