Mumbai, Feb 12 (PTI) Benchmark BSE Sensex fell 558 points on Thursday amid heavy selling in IT shares, as concerns over AI-led disruptions and waning hopes of a Fed rate cut after firm US economic data weighed on investor sentiment.

The 30-share BSE Sensex declined 558.72 points, or 0.66 per cent, to settle at 83,674.92. During the day, it tanked 716.97 points, or 0.85 per cent, to hit an intraday low of 83,516.67.

The 50-share NSE Nifty declined 146.65 points, or 0.57 per cent, to end at 25,807.20.

Technology stocks led the slide, with Tech Mahindra, Infosys and Tata Consultancy Services (TCS) tumbling nearly 6 per cent each to emerge as major laggards on the Sensex.

HCL Technologies, Mahindra & Mahindra, Hindustan Unilever, Reliance Industries, Eternal, HDFC Bank, IndiGo, Kotak Mahindra Bank, and Adani Ports also ended in the red.

On the other hand, Bajaj Finance, ICICI Bank, Trent, Bharat Electronics Ltd, State Bank of India, Asian Paints, Bajaj Finserv, Titan, Larsen & Toubro, Bharti Airtel and Tata Steel were among the gainers.

BSE MidCap Select Index fell 0.48 per cent, while SmallCap Select Index slipped 0.28 per cent.

Among sectoral indices, Focussed IT slumped the most by 5.40 per cent, followed by IT by 5.29 per cent.

Realty also fell by 1.50 per cent, Oil & Gas and Energy fell by 1.18 per cent each, Services by 0.81 per cent, FMCG by 0.43 per cent, Consumer Discretionary by 0.38 per cent and Commodities by 0.32 per cent on the BSE.

However, Financial Services, Industrials, Telecommunication, Capital Goods, Consumer Durables, BSE Top 10 Banks were the only gainers. A total of 2,582 stocks declined, while 1,634 advanced and 152 remained unchanged on the BSE.

Shares of TCS tumbled 5.41 per cent, dragging its market capitalisation below the Rs 10 lakh crore mark for the first time.

At the end of the trading session, the company's market valuation stood at Rs 9,95,661.50 crore, pushing it down to the sixth spot among the country's most valuable listed companies.

ICICI Bank, whose shares gained nearly 2 per cent during the day overtook TCS to claim the fifth position in the list of India's top 10 most valuable listed firms.

"Expect markets to remain range-bound with stock-specific activity as the Q3 earnings season ends. Markets would now look at other triggers including global and domestic inflation, trade developments, and FII flows, while AI-related disruptions could add to volatility,” Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, said.

Khemka added that weakness in IT shares followed fading expectations of a near-term US Fed rate cut after better-than-expected January jobs data in the US and investor’s fear that new advanced AI models could automate several traditional IT services potentially impacting future business growth.

Meanwhile, foreign institutional investors turned net buyers in February after months of selling, purchasing equities worth an Rs 5,913 crore so far this month (up to February 11), providing some support to overall sentiment, he said.

"A nosedive correction in the IT index triggered by mounting concerns over AI-led disruptions, along with low expectations of a US Fed rate cut due to strong US job data and unemployment rates, dampened investor sentiment," Vinod Nair, Head of Research, Geojit Investments Limited, said.

He added that in the global markets, AI is reshaping markets by compressing margins in service-intensive sectors and increasing concentration-led volatility.

"In India, this technology shift is likely to structurally transform IT services by accelerating delivery timelines and automating volume-driven tasks, thereby challenging the traditional headcount-based outsourcing model..

"A weak sentiment in the IT sector, along with lingering geopolitical tensions between the US and Iran, may influence investors to take a cautious approach in the near term," Nair said.

In Asian markets, South Korea's Kospi closed over 3 per cent higher. Japan's Nikkei 225 index, Shanghai's SSE Composite index also ended on a positive note, while Hong Kong's Hang Seng benchmark finished in the negative territory.

European markets are trading higher in mid-session deals. US equities ended lower on Wednesday.

Meanwhile, Foreign institutional investors bought equities worth Rs 943.81 crore on Wednesday, while domestic institutional investors were the net sellers of stocks worth Rs 125.36 crore, according to exchange data.

Brent crude, the global oil benchmark, fell 0.27 per cent to USD 69.21 per barrel.

On Wednesday, the 30-share BSE Sensex slipped 40.28 points to close at 84,233.64, while the NSE Nifty inched up 18.70 points to settle at 25,953.85. PTI HG MR