Indian Markets Edge Higher Despite IT Rout Triggered By ‘SaaSpocalypse’ Fears

Indian equity markets opened on a cautious note on Wednesday, posting moderate gains despite a sharp sell-off in IT stocks amid concerns over AI-led disruption, described by market analysts as a ‘SaaSpocalypse’.

At around 9:25 AM, the Sensex rose 44 points, or 0.05 per cent, to 83,783, while the Nifty added 51 points, or 0.20 per cent, to trade at 25,778.

Broader markets also showed mild resilience, with the Nifty Midcap 100 edging up 0.04 per cent and the Nifty Smallcap 100 gaining 0.01 per cent.

Sector-wise, all major indices traded in the green except IT and realty.

The Nifty IT index plunged 5.39 per cent, tracking weak cues from Wall Street after AI firm Anthropic launched a new legal tool for its Claude chatbot, intensifying fears of heightened competition, pricing pressure and margin erosion for software companies.

Realty stocks also slipped 0.58 per cent. In contrast, auto, metal, consumer durables, and oil and gas stocks led the gains, rising 1.12 per cent, 1.38 per cent, 1.05 per cent and 1.77 per cent, respectively.

Market watchers said immediate support for the Nifty lies in the 25,550–25,600 range, while resistance is seen at 25,850–25,900.

Analysts cautioned that the recent rally, largely fuelled by foreign institutional investor (FII) short covering, may struggle to sustain due to elevated valuations and the sharp sell-off in US technology stocks, which could continue to weigh on Indian IT shares.

Asian markets were largely weak, with Japan’s Nikkei, Hong Kong’s Hang Seng and Chinese indices trading lower, while US markets ended mixed overnight.

On February 3, FIIs were net buyers of Indian equities worth ₹5,236 crore, while domestic institutional investors (DIIs) bought shares worth ₹1,014 crore, providing some support to the market sentiment.