Stock market crash: Why Sensex, Nifty fell in 2026

Indian equities extended losses for a fourth straight session on Tuesday, May 12, with the Sensex and Nifty 50 trading sharply lower as a deep sell-off in IT stocks collided with higher crude oil prices and persistent global uncertainty. The Sensex hit the day’s low with a fall of about 800 points, while the Nifty slipped below 23,600. Sectoral breadth was weak, with most indices in the red and technology leading the decline.

The session’s tone was shaped by a clear sectoral drag. Nifty IT emerged as the top laggard, down more than 3.5 percent at one point and reported as sliding close to 4 percent in early trade. Realty, Consumer Durables, Media and Financial Services were also down over 1 percent each, reflecting broader risk aversion.

What happened on May 12: benchmarks slide again

Tuesday’s decline extended the market’s losing streak to four sessions, keeping traders focused on global cues, commodity prices and earnings-linked pressure in large-cap technology. The Nifty IT index’s fall stood out because it pulled on the broader indices through heavyweight constituents. Market participants also tracked the rupee, which was described as “on the boil” and breaching the 94-per-dollar mark, alongside continuing foreign portfolio outflows referenced in commentary.

The weakness was not limited to one or two names. Selling was broad-based across large-cap and mid-cap IT stocks, turning the sector into the central driver of the day’s risk-off trade.

IT stocks drag the market: the largest pressure point

The sharpest move came from IT counters after OpenAI announced the launch of the OpenAI Deployment Company, described as a new entity to help organisations build and deploy AI systems for critical operations. The announcement added to existing investor anxiety around how fast AI tools could automate tasks that Indian IT services firms traditionally deliver.

Nifty IT heavyweights such as Persistent Systems, TCS, Infosys, LTIMindtree, Tech Mahindra, HCL Technologies and Wipro fell in a 3 to 5 percent range at one stage. Coforge, Mphasis and Oracle Financial Services also slipped up to 3 percent in that window. Ponmudi R, chief executive officer at Enrich Money, linked the fall to “weak global technology cues and cautious investor positioning,” as the sector declined more than 3 percent.

Infosys guidance and deal momentum add to the sell-off

Infosys became a key sentiment trigger, with the stock falling nearly 6 percent to a multi-year low in one of the updates. The company’s Q4 performance was described as strong, but investors focused on its FY27 revenue guidance of 1.5 percent to 3.5 percent, which signalled slower growth expectations.

Deal momentum was another concern. Large deal wins were reported to have declined from $1.8 billion (about ₹45,120 crore at ₹94 per dollar) to $1.2 billion (about ₹30,080 crore), adding to worries about demand visibility. The downbeat reaction spilled into peers, with multiple large-cap names falling 5 to 6 percent in certain snapshots.

AI disruption fears deepen: OpenAI and Anthropic in focus

Beyond quarterly numbers, the market narrative has increasingly centred on AI as a competitive force rather than a productivity tool. The session commentary referenced both OpenAI’s new deployment-focused entity and newer AI tools highlighted by US-based Anthropic that can automate tasks such as coding, documentation and data processing.

These are areas closely tied to India’s outsourcing model, so even without immediate company-specific changes, the prospect of faster automation can change how investors price medium-term growth. VK Vijayakumar of Geojit Financial Services said the theme of weakness in tech stocks from potential AI impact continues, also pointing to weakness in ADRs of Indian IT companies.

Crude oil stays above $100 and raises macro risk

Energy prices added another layer of pressure. Brent crude was reported around the $105 per barrel level, supported by supply concerns amid escalating US-Iran tensions around the Strait of Hormuz. In the latest check cited, Brent rose 0.66 percent to $104.90 per barrel, while WTI was up 0.92 percent at $19.97.

For equity markets, higher crude can tighten financial conditions through imported inflation risk and pressure on the currency. It also raises uncertainty for sectors sensitive to input costs and consumer demand.

US-Iran conflict worries and global policy uncertainty

Geopolitics remained central to risk sentiment. The report cited US President Donald Trump saying the ceasefire with Iran is “on life support” after rejecting Tehran’s latest offer to end the conflict as “totally unacceptable.”

Ankur Punj of Equirus Wealth flagged the lack of clarity on peace talks, linking it to higher crude prices and pessimism alongside a rupee breach of 94 per dollar and continuing FII outflows. Separately, remarks about potential new tariffs in the US and the EU pausing a major trade deal after tariff-rule changes were also cited as factors amplifying uncertainty and delaying corporate spending.

Prime Minister’s remarks and the market’s risk lens

JM Financial noted that equity markets turned negative after the Prime Minister’s address calling for conservation of foreign exchange reserves. The steps referenced included lower gold imports, reduced fuel and fertiliser usage, and moderation in overseas travel.

While the longer-term intent is macro stability, such messaging can alter near-term market expectations around demand and policy priorities, especially during a period already dominated by global risk events.

Key numbers to track from the session

How major IT stocks moved (selected snapshots)

Why the sell-off matters for the broader market

The session underscored how concentrated selling in IT can pull benchmarks lower. The report noted that IT contributes 10.83 percent to the Nifty 50, so sharp declines in heavyweights like TCS and Infosys can amplify index moves even when weakness is not uniform across the market.

The broader backdrop also remained fragile: crude above $100, geopolitical risk in West Asia, tariff uncertainty in the US, and a weaker rupee were all cited as reasons investors stayed cautious. The combined impact was visible in sectoral breadth, with most indices trading in the red and defensive positioning dominating.

Conclusion

Tuesday’s market decline reflected a convergence of IT-led selling, higher crude oil prices, and global uncertainty linked to US-Iran tensions and trade policy risk. Investors are also weighing weaker guidance signals, slowing deal momentum and the growing debate around AI’s impact on outsourcing demand. Near-term attention is likely to stay on global developments, crude moves, and subsequent corporate updates as markets look for clarity.