Nifty, Sensex Expected to Open Lower Amid Global Technology Selloff

Global Markets Plunge as Risk Sentiment Weakens

The Indian markets are expected to experience a subdued start as the GIFT Nifty drops over 1%, or 200 points, amid a global sell-off that has weakened sentiment. This negative setup is largely driven by a sharp deterioration in global risk sentiment, which mirrors a broad risk-off move across global markets.

In Asia, investors have hit the brakes on the soaring AI-rally, questioning lofty valuations in technology-linked stocks. South Korea's benchmark Kospi plummeted more than 8%, prompting a temporary trading halt. Investors have rushed to exit heavyweight chipmakers such as Samsung Electronics and SK Hynix due to concerns that the AI-driven rally has become overstretched.

Japanese equities are also under pressure, with the Nikkei falling 3.5% in early trade. Despite a modest recovery in U.S. index futures, with contracts linked to the S&P 500 and Nasdaq 100 edging higher after Friday's sharp correction on Wall Street, Japanese equities have failed to recover.

Read also: SMR Jewels Debut on BSE SME with 20% Listing Discount

On Friday, US markets concluded last week with their steepest losses in months. The tech-heavy Nasdaq Composite slumped 4.2%, dragged down by semiconductor stocks after a stronger-than-expected jobs report fueled expectations that the Federal Reserve could keep interest rates higher for longer. The S&P 500 dropped 2.6%, snapping a nine-week winning streak and recording its worst session since October, while the Dow Jones Industrial Average shed nearly 700 points.

Investor sentiment has also been rattled by escalating geopolitical tensions in the Middle East. Fresh Israeli strikes on Beirut pushed crude oil prices and the U.S. dollar higher, adding another layer of uncertainty to global markets. India's dependence on imported crude makes rising energy prices a key risk, which could keep inflation concerns elevated despite recent policy support from the RBI.

For Indian markets, the combination of a global technology sell-off, elevated oil prices, and a stronger dollar is likely to keep sentiment fragile at the start of the week, particularly in sectors with high foreign investor ownership.

Read also: Indian Markets Plunge: Sensex Falls 650 Points as Nifty Drops Below 23,200 Amid Crude Price Concerns