Global AI Sell-Off Pulls Down Sensex & Nifty - Rupee Hits Record Low Amid Rising Market Caution

Tech-led correction in global markets sparks risk-off sentiment; volatility jumps as midcaps, metals and rate-sensitive sectors face pressure

Mumbai, November 22: Indian equities ended lower on Friday as a global sell-off in artificial intelligence (AI) stocks triggered widespread caution across markets. Despite strong quarterly earnings from major tech firms, mounting concerns over overheated AI valuations in the US overshadowed optimism, pushing domestic indices into the red and sending the rupee to a fresh record low.

Market Snapshot

• Nifty 50: 26,068 (−124 pts / −0.5%)
• Sensex: 85,231 (−400 pts / −0.5%)
• Weekly Gains: Nifty +0.6%, Sensex +0.8%

AI Valuation Fears Spark Global Tech Rout

A wave of profit-taking hit US markets overnight as investors questioned whether the AI rally has run ahead of fundamentals:

• Nasdaq: −2.2%
• S&P 500: −1.6%
• Dow Jones: −0.8%

Strong earnings failed to calm fears. As excitement around AI demand and chip sales cooled, global investors reassessed tech valuations—dragging down markets worldwide. This caution flowed into India, where traders trimmed exposure to high-growth sectors and shifted to defensive positioning.

Rupee Slide, Fed Uncertainty Deepen Volatility

The rupee's fall to a lifetime low added to risk aversion and prompted fresh foreign portfolio outflows. Meanwhile, a mixed US jobs report muddied expectations around the US Federal Reserve's next rate move, suppressing risk appetite globally.

• India VIX: +12.3% to 13.62 — signalling sharper near-term swings
• Broader sentiment turned cautious across institutional and retail categories

Sector Check: Metals, Realty, PSU Banks Hit the Hardest

Mid- and small-caps bore the brunt of selling:

• Nifty Midcap 150: -1.1%
• Nifty Smallcap 250: -1.2%

Market breadth was weak: out of 4,338 BSE stocks, nearly 70% declined.

Institutional Flows Show Global Caution, Domestic Confidence

• FPIs: Net sellers ₹1,766 crore
• DIIs: Net buyers ₹3,161 crore

The divergence reflects short-term risk aversion from global investors versus supportive domestic flows anchored in India's long-term growth story.

Technical View: 26,000 Is the Line in the Sand

• Immediate support: 25,750
• Crucial level: 26,000 — holding this could pave the way for a fresh all-time high
• Upside: Nifty is just ~1% away from its peak
• Downside: A fall below 26,000 may push the market into consolidation or a deeper correction

US–India Trade Deal in Focus: A Potential Market Swing Factor

Investors await clarity on the bilateral trade agreement.

• A delay could trigger a 2–3% pullback, taking Nifty toward 25,500
• However, analysts believe much of the pessimism is already priced in, increasing the possibility of an upside surprise

Bottom Line: The First Real Test for AI Euphoria

This week's global correction signals the first meaningful test for the AI-driven rally that has powered markets for months. For India, strong domestic fundamentals and steady DII inflows remain supportive - but global uncertainties around AI valuations, Fed policy, and currency pressures are likely to keep volatility elevated.

If Nifty stays above 26,000, markets may still march toward new highs. If not, expect choppy trade driven by global tech cues and shifting sector leadership.