SENSEX tumbles 550 pts, NIFTY tests 25,000 amid weak global cues; IT stocks decline

On expected lines, the domestic equity market witnessed a weak start to trading on Wednesday, September 4, on weak global cues. 

The investor sentiment took a hit after weak US economic data. Asia-Pacific markets plunged in the early trade, led by Japan’s Nikkei 225 after US tech stocks sold off and weak US economic data sparked recession fears.

In the overnight trade on Wall Street, shares of AI heavyweight Nvidia tanked 9.5% in the deepest ever single-day decline in market value for a US company, as investors softened their optimism about artificial intelligence in a broad market selloff following tepid economic data.

Nvidia lost $279 billion in market capitalisation, a major indication that investors are becoming more cautious about emerging AI technology that has fueled much of this year's stock market gains, as per a Reuters report. 

In the commodity market, oil prices fell on Wednesday, extending a plunge of more than 4% the previous day, on expectations that a political dispute halting Libyan exports could be resolved and concerns over lower global demand growth.

"Brent crude futures for November fell 37 cents, or 0.5%, to $73.38 by 0330 GMT, after the previous session's fall of 4.9%. U S West Texas Intermediate crude futures for October were down 41 cents, or 0.6%, at $69.93, after dropping 4.4% on Tuesday," Reuters reported.

As a result, oil marketing companies (OMCs) and other oil-linked stocks, such as paints and tyres, were trading with gains. For paints and tyre firms, crude oil is one of the key raw materials for their end product; hence, a decline in raw material is positive for these companies. 

Similarly, Asian Paints was trading nearly 2% higher at ₹3,210.05. Kansai Nerolac Paints was up 1%. 

Among OMCs, IOC was up 1% at ₹177.85 on the BSE. BPCL gained over 1%. 

SECTOR WATCH

Sectorally, IT stocks took the knock, tracking weakness in tech stocks globally. The BSE Information Technology index was trading 1.34% lower at 42,929.34 points. The biggest contributors to the index's loss were Infosys, TCS, Wipro, and Tech Mahindra.

BROADER MARKET

Small-cap stocks bucked the trend as the BSE SmallCap index was trading 0.43% higher at 56,305.78 levels. The BSE MidCap index, on the other hand, was trading at 49,015.80, down 0.25%.