Global cues, AI fears pressure markets now
Global market sentiment weakens as investors react to uncertain global cues and rising AI disruption fears, adding fresh pressure on equities.
AI disruption fears weigh on sentiment as global cues dominate
Indian equity markets enter the week navigating a fragile mix of global signals and growing unease around artificial intelligence–linked disruption. Analysts indicate that overseas developments, particularly from the United States, are likely to set the tone, while AI disruption fears continue to pressure technology stocks.
Stronger-than-expected U.S. jobs data have altered expectations around interest rate cuts, cooling earlier optimism about monetary easing. Investors are now awaiting the minutes of the Federal Open Market Committee (FOMC) for clearer policy direction. The shift in rate outlook has already influenced global risk appetite, and domestic benchmarks have responded accordingly.
At the same time, volatility in global technology stocks has intensified concerns that rapid advances in artificial intelligence could reshape traditional business models. These AI disruption fears have added another layer of uncertainty to an already cautious market environment.
Weekly decline reflects global pressure and AI disruption fears
The impact was visible in last week’s trading performance. The 30-share BSE Sensex declined 953.64 points, or 1.14 per cent, while the NSE Nifty slipped 222.6 points, or 0.86 per cent.
Friday’s session was particularly sharp. The Sensex fell 1,048.16 points to close at 82,626.76. The Nifty dropped 336.10 points, settling at 25,471.10.
Broader market indices also mirrored the weakness. The BSE SmallCap index declined 1.90 per cent, while the BSE MidCap index slipped 1.19 per cent, signalling that selling pressure extended beyond frontline stocks and into the wider market.
Technology counters bore the brunt of the sell-off. The Nifty IT index touched a 10-month low before ending 1.4 per cent lower. Market participants attributed this weakness to persistent AI disruption fears, which have prompted reassessment of revenue visibility and long-term service models across the sector.
Metal stocks also faced selling pressure. Profit-booking coincided with a stronger dollar index and reports suggesting potential changes in international trade settlement systems. These developments raised concerns about realisations in the metals space, compounding the broader market decline.
Global data points in focus
Beyond sector-specific movements, attention this week remains fixed on global macroeconomic indicators.
Analysts have highlighted U.S. labour data and the Federal Reserve’s policy trajectory as primary drivers. The release of FOMC minutes is expected to offer insight into how policymakers interpret current inflation and employment trends.
Domestically, investors will track wholesale price index (WPI) inflation figures, balance of trade data, and flash purchasing managers’ index (PMI) readings across manufacturing, services and composite segments. These high-frequency indicators are viewed as key gauges of economic momentum.
Bank loan growth numbers and foreign exchange reserve data are also scheduled for release, adding to the flow of information that could influence short-term positioning.
Analyst commentary underscores a cautious undertone.
Vinod Nair, head of research at Geojit Investments Ltd, noted that tariff-related concerns have eased, while the domestic earnings season has produced mixed outcomes. He stated that market focus will hinge largely on global cues.
Ajit Mishra, senior vice-president of research at Religare Broking Ltd, emphasised that investors are evaluating domestic data releases alongside continued repricing in technology stocks. The adjustment in valuations reflects broader global uncertainty, including the implications of artificial intelligence–driven shifts.
Despite earlier supportive developments, such as favourable outcomes from India-U.S. trade discussions and renewed foreign institutional investor interest, sentiment turned cautious as technology stocks came under pressure.
Institutional flows and currency movement
Foreign institutional investors (FIIs) were net buyers of equities worth Rs 108.42 crore on Thursday. Domestic institutional investors continued their buying activity as well, recording net inflows of Rs 276.85 crore.
Currency movement remained relatively contained. The Indian rupee closed 5 paise lower at 90.66 against the U.S. dollar on Friday.
These figures suggest that while volatility persists, participation from institutional investors has not withdrawn entirely. However, AI disruption fears and global policy signals are influencing allocation decisions.
Range-bound outlook amid layered uncertainties
Analysts suggest that broader indices could remain range-bound until clearer signals emerge from global macroeconomic data and central bank commentary.
Certain domestically oriented sectors, including banking, automobiles and segments driven by consumption demand, may see relative stability if global pressures persist. At the same time, technology stocks are likely to remain sensitive to developments linked to artificial intelligence and global risk sentiment.
Geopolitical tensions add another variable to the equation, reinforcing the cautious undertone visible across asset classes.
As the week unfolds, investors will be assessing inflation readings, PMI data, currency movements and institutional flows in conjunction with global developments. The interplay between external economic signals and AI disruption fears continues to shape near-term market behaviour.
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Kulshreshth Chaturvedi
I’m Kulshreshth Chaturvedi, a writer and author specialising in creative writing, blogs, and professional content. I write on literature, ideas, and modern perspectives, focusing on clear, engaging, and well-structured storytelling. My goal is to create meaningful writing that inspires readers, builds connections, and delivers real value through words.
