Rs 3 lakh crore selloff! Sensex tumbles over 750 pts, Nifty below 25,550. 5 major factors behind the sharp decline

Indian benchmark indices Nifty 50 and BSE Sensex traded sharply lower on Tuesday after a sharp fall in IT and auto stocks dragged the frontline indices lower. The steep slide wiped out Rs 2.94 lakh crore in investor wealth, dragging the total BSE market capitalisation down to around Rs 466 lakh crore.

Sensex cracked over 750 points to the day’s low of 82,481 while the 50-share Nifty index dropped over 150 points to slip below the 25,550 level.

Here are the major factors that are rattling investor sentiment:

1) IT bloodbath gets new jolt

Shares of information technology (IT) companies such as Tata Consultancy Services (TCS), Infosys and HCL Technologies, among others, faced heavy selling pressure in Tuesday’s trade after Anthropic said its Claude Code tool can be used to modernise legacy systems that run on COBOL. Infosys shares declined nearly 3%, while HCL Technologies, Mphasis and Persistent Systems shares were down more than 2% each. TCS, Tech Mahindra, Wipro and other stocks were down around 2% each, pushing the Nifty IT index down more than 2% to 30,849.05, as seen at 9.20 am.

Anthropic on Monday said Claude Code could automate much of the exploration and analysis that drives the complexity of COBOL modernisation. In the US, the selloff was worst for IBM, which declined 13% overnight. Short for Common Business-Oriented Language, COBOL is a dominant programming system developed in the late 1950s and is commonly used in business data processing, including payment processing and retail transaction systems. According to Anthropic, an estimated 95% of ATM transactions in the U.S. still rely on COBOL, making it a potential target for cost-efficient AI disruption.

2) Trump’s newest tariff threat

Concerns around US President Donald Trump’s trade stance further deepened the selloff. Posting on Truth Social on Monday, Trump warned that any country attempting to “play games” with the recent court ruling would face significantly higher tariffs.
His remarks came after the Supreme Court of the United States on Friday struck down tariffs imposed under the International Emergency Economic Powers Act. In response, Trump said he would instead introduce a 15% global tariff under Section 122 of the Trade Act of 1974.

3) US tech selloff, Asian markets fall

Asian stock markets faltered in early trade on Tuesday as an overnight selloff on Wall Street unsettled investors. Sentiment was weighed down by heightened uncertainty over Donald Trump’s tariff policy and rising geopolitical tensions.

MSCI Asia-Pacific ex Japan Index, MSCI’s broadest index of Asia-Pacific shares outside Japan, reversed earlier gains following a six-day rally and was last down 0.2%, led by declines in South Korea.
Meanwhile, Japan’s Nikkei 225 rose 0.7% as markets reopened after a holiday. S&P 500 e-mini futures were up 0.1%.

Overnight in the U.S., the S&P 500 fell 1.0%, wiping out the previous week’s gains. Concerns about the potential displacement effects of artificial intelligence on software and other industries also pushed the Nasdaq Composite down 1.1%.

4) Weekly expiry adds to unease

The decline comes alongside the weekly expiry of Nifty 50 derivatives, a period when traders typically square off or roll over their positions. As large options positions are adjusted, the underlying index can see sharper-than-usual moves. Unwinding of long bets and fresh hedging activity can add to selling pressure.

At the same time, option writers often attempt to anchor prices near key strike levels, which can heighten intraday volatility. With liquidity thinning in some stocks during these adjustments, even modest selling can magnify the downside across the broader market.

5) Weak Rupee vs Dollar

The Indian Rupee was down 0.07% at 90.95 against the US dollar on Tuesday. Currency depreciation could trigger foreign capital outflows, which can pressure equities. A weaker rupee also increases the cost of imports—especially crude oil—raising inflation risks and squeezing margins for companies dependent on imported inputs. This can dampen earnings expectations and market sentiment.