Mumbai, Feb 4 (NationPress) The Indian equity markets registered moderate gains on Wednesday morning, driven by broad-based advancements across various sectors, although they were hampered by declines in IT stocks triggered by the AI-induced 'SaaSpocalypse'.

The Indian IT sector saw a significant drop, closely following negative cues from Wall Street, which reflected heightened competition and diminishing profit margins due to advancements in artificial intelligence, particularly following the recent introduction of a legal tool by Anthropic for its Claude AI chatbot.

As of 9:25 AM, the Sensex rose by 44 points, or 0.05 percent, reaching 83,783, while the Nifty climbed 51 points, or 0.20 percent, settling at 25,778.

Major broad-cap indices also posted moderate gains, with the Nifty Midcap 100 increasing by 0.04 percent and the Nifty Smallcap 100 edging up 0.01 percent.

Most sectoral indices were in the green, with the exception of IT and realty, which saw declines of 5.39 percent and 0.58 percent, respectively. The Nifty auto, metal, consumer durables, and oil and gas sectors emerged as the primary gainers, rising by 1.12 percent, 1.38 percent, 1.05 percent, and 1.77 percent, correspondingly.

Market analysts noted that immediate support for the Nifty is situated in the 25,550-25,600 range, while resistance is projected to be between 25,850 and 25,900.

Forecasters anticipate that the rally driven by the US-India trade agreement may encounter challenges in maintaining momentum, emphasizing that the sell-off in US IT stocks on Tuesday could have adverse effects on the Indian IT index.

As a significant provider of software services to numerous US firms, India's IT sector is under pressure, with Wall Street software stocks plunging by as much as 25 percent following the latest AI launch by Anthropic. Analysts have labeled this situation a 'SaaSpocalypse'.

Market watchers believe that, given the high valuations across sectors, there is no fundamental support for a prolonged rally, especially with the monetary policy meeting set for February 6 likely to maintain current interest rates.

The rally observed on Thursday was primarily driven by FII short covering. Sectors likely to benefit from exports to the US, such as textiles, apparel, gems, jewellery, and marine processing, are expected to see increased activity in prices, they added.

In Asian markets, the Shanghai index was flat, while the Shenzhen index fell by 0.88 percent. Japan's Nikkei dropped by 0.6 percent, and Hong Kong's Hang Seng Index decreased by 0.73 percent. In contrast, South Korea's Kospi rose by 0.72 percent.

In the previous trading session, US markets finished mostly in the green, with the Nasdaq down by 1.43 percent. The S&P 500 fell by 0.84 percent, and the Dow Jones declined by 0.34 percent.

On February 3, foreign institutional investors (FIIs) net purchased equities worth Rs 5,236 crore, while domestic institutional investors (DIIs) were net buyers of equities valued at Rs 1,014 crore.

aar/na