The continuing sell-off in technology and artificial intelligence (AI) stocks has spread to other sectors. US markets suffered heavy losses on Thursday, while Asian markets are witnessing a bloodbath this morning. With no positive developments emerging from the Iran war, crude oil prices have climbed close to $100 a barrel. Gold has declined, while cryptocurrencies have also weakened.
In derivatives trading at GIFT City, GIFT Nifty closed at 24,487.00 on Thursday night. This morning, it climbed to 24,515 before slipping to 24,409.
The indications are that Indian markets will open with substantial losses today. However, if foreign investors continue buying, the market could recover and move into positive territory.
Stock market analysts generally try to present an optimistic picture. Their interest lies in attracting money into the market and encouraging investment. Their assessments, therefore, tend to avoid anything that could obstruct investment flows.
To many investors, the current collapse in US technology stocks resembles the dot-com crash of 2000. Analysts, however, offer a different argument.
Most companies during the dot-com boom were not profitable. Today, the situation is different, with most major companies earning substantial profits. Therefore, they argue, there is no need to worry. But that is hardly a convincing analysis.
It is true that most listed technology companies are profitable. However, dozens of companies remain unlisted, including Anthropic and OpenAI. Although they do not raise money through stock exchanges, they still mobilise capital from investors. Investment funds and venture capital firms have invested heavily in them.
The Democratic Party is said to be attempting to introduce a moratorium on data centre construction in the United States. Such a move could delay data centre projects indefinitely.
Naturally, this would also delay business for companies manufacturing the materials needed for these projects. Production of cement, steel, paints, copper and aluminium could be affected, along with demand for power generators, air conditioners, cables and pipes. Servers, processors and other equipment required by data centres would also be needed later than originally planned.
It is not just data centre developers who would be affected. Capital invested by several other businesses could also remain idle. When business activity stalls, it leads to an economic slowdown.
For more than two years, the largest investments have been flowing into AI infrastructure. If that investment cycle is disrupted, economic growth could turn into economic weakness. That is the real danger.
Democrats who have benefited electorally from public opposition to data centres are likely to move against such projects. This could have consequences for the broader economy.
In the initial days of the sell-off, American data centre companies suffered losses. Subsequently, computer chip manufacturers in the US, Europe and Asia came under pressure.
On Thursday, AI companies and other technology stocks experienced sharp declines. When Nvidia and other major chip manufacturers continue to fall despite reporting average profit margins of around 75% and profit growth of around 70%, investors have reason to be concerned.
The decline is unlikely to remain confined to technology stocks. Capital is invested across sectors. When investors lose money in one sector, they may be forced to withdraw funds from other sectors as well. That is the reason for concern.
A period requiring extreme caution from investors is approaching.
The advice most investment experts give during such periods is to hold cash. In other words, they suggest that this is not an appropriate time to invest. However, many investors interpret this as advice to sell their existing investments. The wave of selling that follows can eventually push markets into major crashes.
US markets rallied on Wednesday, encouraged by election results that weakened Donald Trump's political position and by falling crude oil prices.
However, after investors reassessed the situation, Thursday's trading wiped out those gains and more. Investors rushed to reduce their exposure to technology stocks. The Nasdaq Composite fell more than 10% from the record high reached last month, entering correction territory.
Thursday was the worst day for stocks since April 2025, when Trump launched his tariff war. The semiconductor index plunged 12%, its biggest decline since the market crash at the beginning of the Covid-19 pandemic.
The sell-off was not limited to technology companies. Banking major JPMorgan, industrial equipment manufacturer Caterpillar and aircraft maker Boeing also declined.
For every stock that advanced, six declined. Companies associated with Elon Musk also suffered substantial losses.
The seven leading technology companies collectively known as the Magnificent Seven lost around $1 trillion in market capitalisation in a single day. Nvidia alone accounted for $440 billion of this erosion.
On Thursday, the Dow Jones Industrial Average fell 1,833.06 points, or 3.44%, to close at 51,523.06. The S&P 500 declined 334.89 points, or 4.36%, to finish at 7,353.73. The Nasdaq Composite plunged 1,421.52 points, or 5.52%, to close at 24,314.99.
US stock futures are moving in different directions this morning. Dow Jones futures are down 287 points, or 0.56%. S&P 500 futures are up six points, or 0.08%, while Nasdaq futures have gained 199 points, or 0.74%.
In the American Depository Receipt (ADR) market in New York on Thursday, HDFC Bank gained 1.52% during regular trading. However, it declined 0.81% in subsequent trading to close at $24.50.
ICICI Bank rose 4.06% during regular trading before slipping 0.43% in subsequent trading to finish at $32.39.
Infosys surged 4.58% during regular trading but fell 2.50% in subsequent trading to close at $12.48.
Wipro remained unchanged during regular trading and later declined 0.44% to finish at $2.1505.
European stock indices declined on Thursday as crude oil prices resumed their upward movement. The French index was the only major exception, recording gains.
Asian markets are witnessing heavy losses this morning. South Korea's Kospi index plunged 9%. Semiconductor companies SK Hynix and Samsung Electronics declined 12% and 9%, respectively. Japan's Nikkei fell 7%.
SoftBank Group, which has substantial investments in semiconductor companies, lost as much as 15%. Australia's benchmark index declined 1%.
Taiwan's stock index fell 7%, while Taiwan Semiconductor Manufacturing Company (TSMC) plunged 10%. The Shanghai index dropped 1.60%, while Hong Kong's Hang Seng lost 2%.
Indian equities rallied sharply on Thursday as foreign institutional investors invested ₹14,974.68 crore in shares, more than double their investment on the previous day.
It was the sixth consecutive session of gains. Over these six trading sessions, the market capitalisation of Indian companies increased by ₹30 lakh-crore. Total market capitalisation reached ₹502 lakh-crore, equivalent to approximately $5.31 trillion.
Although market capitalisation reached a record level, the Sensex remained 7.6% below its record level of 85,836 reached on September 26, 2024. The sharp increase in total market capitalisation is partly because several large companies have been listed over the past two years.
Foreign investors are anticipating a substantial reduction or complete withdrawal of the long-term capital gains (LTCG) tax on equity investments.
All sectors except media and defence advanced on Thursday. Capital markets, automobiles, financial services, banking, tourism, real estate, information technology and consumer durables were among the sectors that recorded strong gains.
The broader market also remained positive, with most stocks advancing. On the BSE, 2,993 stocks gained while 1,469 declined. On the NSE, 2,537 stocks advanced and 1,077 fell.
Foreign institutional investors made net purchases of ₹14,974.68 crore in the cash market on Thursday. Domestic funds and institutions together recorded net sales of ₹10,444.54 crore.
The Sensex gained 2,008.61 points, or 2.60%, to close at 79,310.01. The Nifty 50 advanced 576.00 points, or 2.40%, to finish at 24,536.60. Bank Nifty surged 1,860.05 points, or 3.33%, to close at 57,773.65.
The Nifty Midcap 100 index rose 1,115.40 points, or 1.87%, to finish at 60,620.90. The Nifty Smallcap 100 index gained 106.05 points, or 0.56%, to close at 19,132.45.
The decline in stock markets and the recovery in crude oil prices halted gold's rally on Thursday. After climbing to $4,148 an ounce, gold retreated. It eventually closed at $4,089.20, gaining $28, or 0.69%. This morning, the price fell as low as $4,056.
In Kerala, the price of 22-carat gold rose by ₹2,360 per sovereign on Thursday to reach ₹1,07,080.
Silver declined 0.81% on Thursday to close at $51.93 an ounce. This morning, it was trading at $51.90. Platinum stood at $1,514 an ounce, palladium at $1,006 and rhodium at $8,650.
Rubber prices declined in international markets as well as in Kerala. In Bangkok, RSS-1 rubber was quoted at $280.10 per quintal, while RSS-3 stood at $276.60.
In Kerala, RSS-4 rubber declined to ₹29,900 per quintal.
Major industrial metals showed mixed trends. Copper declined 0.63% to $14,109.85 a tonne. Aluminium gained 0.33% to reach $3,084.09 a tonne. Nickel, zinc and lead advanced, while tin declined.
Cocoa prices fell 5.11% to close at $5,177 a tonne. Arabica coffee declined 0.84% to $2.77 a pound. The weakening Brazilian currency is putting downward pressure on prices. Palm oil declined 2.65% to 4,377 Malaysian ringgit a tonne.
The US dollar index declined marginally on Thursday to close at 101.55. This morning, it rose to 101.62. The euro strengthened to $1.1212, while the British pound reached $1.3448.
The Japanese yen strengthened to 157.87 against the dollar. The Chinese yuan weakened to 6.69 against the dollar.
The yield on 10-year US Treasury bonds rose to 4.845% this morning.
The Indian rupee advanced again on Thursday. The dollar declined by 17 paise to close at ₹94.47. In the offshore forward market this morning, the dollar was quoted at ₹94.45.
The Chinese yuan declined to ₹14.12, while the euro weakened to ₹105.98.
With no developments indicating a change in the direction of the Iran conflict, crude oil prices have once again moved close to $100 a barrel. Brent crude rose $3.67, or 3.86%, on Thursday to reach $98.29 a barrel.
This morning, it gained another 1% to reach $99.31. West Texas Intermediate (WTI) crude was trading at $91.27 a barrel.
Cryptocurrency prices fell again. Bitcoin dropped below $76,000. Ether was trading below $2,235, while Solana slipped below $90.
(Thursday, November 5)
Sensex: 79,310.01 (+2.60%)
Nifty 50: 24,536.60 (+2.40%)
Bank Nifty: 57,773.65 (+3.33%)
Nifty Midcap 100: 60,620.90 (+1.87%)
Nifty Smallcap 100: 19,132.45 (+0.56%)
Dow Jones: 51,523.06 (−3.44%)
S&P 500: 7,353.73 (−4.36%)
Nasdaq: 24,314.99 (−5.52%)
US dollar: ₹94.47 (−₹0.17)
Gold (ounce): $4,089.20 (+$28.00)
Gold (sovereign): ₹1,07,080 (+₹2,360)
Brent crude: $98.29 (+$3.67)