The debut of Anthropic’s agentic coding model Claude Cowork triggered turbulence in global markets last week. Its impact was visible on Dalal Street, where the BSE Sensex fell by more than 1,000 points in a single session, eroding investments worth ₹6.5 lakh crore.
Although markets closed in the green for three consecutive sessions this week, volatility returned sharply on Thursday, February 19. Amid fears surrounding US President Donald Trump and possible action against Iran, the Sensex dropped over 1,400 points at one stage due to intense profit-booking before closing 1,236 points lower. The Nifty 50 declined 365 points in tandem.
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This marked the market’s biggest single-day fall since the presentation of the Union Budget, with losses amounting to ₹7.5 lakh crore, exceeding last week’s decline. The volatility index, India VIX, surged 10 per cent to 13.46, reflecting heightened uncertainty. The monthly futures and options expiry further added to investor anxiety.
Profit booking after three-day rally
Markets had rallied for three straight sessions, with gains in both large-cap and broader indices. Many investors, particularly in small- and mid-cap stocks, were sitting on profits. However, rapid geopolitical developments prompted a wave of profit booking, intensifying selling pressure and dragging indices lower.
US-Iran tensions weigh on sentiment
Concerns over a potential US-Iran conflict have unsettled global investors. Reports of a late-night core group meeting in the US fueled speculation about possible military escalation. Analysts warned that any disruption, including a potential closure of the Strait of Hormuz, could severely impact global trade.
After the UN nuclear watchdog agency issued a warning to Iran, tensions escalated further. Brent crude prices jumped over 4 per cent in a single session, nearing $71 per barrel. Rising oil prices added to market concerns and contributed to the downturn.
Global weakness and FII activity
Technology-heavy global indices also weakened on Thursday. On Wall Street, S&P 500 and Nasdaq futures traded in the red. Additionally, Lunar New Year holidays led to reduced activity from major foreign institutional investors (FIIs), limiting capital inflows and increasing vulnerability in domestic markets.
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IT and banking stocks under pressure
The Indian IT sector has seen significant foreign outflows in recent weeks. Over the past two weeks, FIIs withdrew approximately ₹10,956 crore from the sector. Since the beginning of 2025, total outflows have reached ₹74,698 crore.
The Nifty IT Index has declined around 13 per cent in recent days. Stocks such as Wipro fell 19 per cent, LTIMindtree dropped 22 per cent, and L&T Technology Services declined 14.5 per cent.
Banking and financial stocks also faced selling pressure. Heavyweights such as HDFC Bank, Kotak Mahindra Bank and State Bank of India declined between 1 and 2 per cent. The Bank Nifty slipping below the 61,000 level further dampened market sentiment.
Investors now await Friday’s session to assess whether volatility will persist amid ongoing geopolitical and global market uncertainties.
