Indian, global stocks turn weak as AI-heavy Korea plunges 10%

A sharp sell-off in Korean markets pushed domestic investors into a cautious mode as they preferred to book profits from recent rally. South Korea’s Kospi plunged 10 per cent on Tuesday, briefly triggering a circuit breaker, and the shockwaves were felt acutely in Mumbai — dragging the Nifty 50 down 278.80 points, or 1.16 per cent, to close at 23,824.10 — while the Sensex shed 893.39 points to settle at 76,200.68.

“The decline was largely influenced by weakness across Asian markets, which also weighed on US futures amid concerns over the sustainability of the AI-driven rally, dampening overall market sentiment,” said Ajit Mishra, SVP, Research, Religare Broking

Both benchmarks closed near their day’s lows after a session that began on a flat note before selling intensified sharply in the second half, as European stocks also began on weak note. Japan’s Nikkei 225 index, Shanghai’s SSE Composite index, Hong Kong’s Hang Seng index and Taiwan’s Weighted index fell between 1 and 4 per cent.

Meanwhile, Nasdaq opened nearly 2 per cent lower while the Dow Jones slipped 0.5 per cent and S&P 500 weakened 1.3 per cent.

The broader market followed suit, with the Nifty Midcap 100 falling 1.05 per cent to 62,070 and the Nifty Smallcap 100 declining a comparatively modest 0.48 per cent to 18,805, suggesting selective buying at lower levels. The IT sector bore the brunt of the selling, declining more than 2 per cent, after brokerages Jefferies and Morgan Stanley flagged softer demand trends following a weaker-than-expected outlook from Accenture. The selloff was compounded by broader concerns over AI-related valuations in US equities spilling across global markets.

Nifty Metal was another major laggard, falling as much as 3 per cent, tracking a drop in global metal prices. PSU banks and media also ended significantly lower. Pharmaceutical and healthcare stocks bucked the trend, attracting defensive buying after reports emerged that the U.S. FDA had approached Indian drug manufacturers through the Indian Drug Manufacturers’ Association to address a shortage of ifosfamide injection, a chemotherapy drug used in the treatment of multiple cancers.

India VIX rose over 9 per cent to around 14, signalling heightened near-term market volatility.

Vinod Nair, Head of Research at Geojit Investments, said that “most sectoral indices ended in the red, with metals recording the sharpest decline due to falling global prices and demand concerns.” He added that “the domestic IT sector also remained under pressure, reflecting the global tech rout and persistent concerns over AI-led disruptions”.

Siddhartha Khemka of Motilal Oswal said Indian equities are expected to “trade sideways with a marginal negative bias in the near term amid weak global cues, continued FII outflows and uncertainty surrounding the proposed U.S.-Iran ceasefire.”