Why Stock Market Crashed Today: 5 Key Reasons Behind Nifty Fall

In the United States, Wall Street also ended sharply lower on Monday, with major indexes such as the S&P 500 and Nasdaq falling more than 1% as risk-off sentiment intensified among investors.

Below, we explore five key reasons driving today’s downturn and explain how each has influenced markets.

AI Shock: Anthropic’s Claude Agent & The Citrini Research Hypothesis

The biggest trigger came from global tech disruption fears.

The sell-off initially started after Anthropic unveiled its Claude Cowork Agent, an advanced AI system capable of autonomous coding and project management. The launch intensified concerns that AI could rapidly replace traditional software services work.

Soon after, a viral report titled “The 2028 Global Intelligence Crisis” by Citrini Research amplified those fears.

The report presents a structural hypothesis that threatens the very foundation of India’s outsourcing model, labour arbitrage.

For decades, Indian IT giants such as Tata Consultancy Services, Infosys, and Wipro thrived by offering high-quality engineering talent at lower costs than Western peers.

However, Citrini argues that “agentic AI” neutralizes this advantage because the marginal cost of AI coding agents has collapsed to nearly the cost of electricity.

What the Report Predicts:

• Contract cancellations could accelerate through 2027
• The services trade surplus may evaporate
• 5% of white-collar workers could be displaced within 18 months
• The rupee could fall up to 18% in four months
• By Q1 2028, the International Monetary Fund may begin preliminary discussions with India

The report even suggests India could face macro stress similar to 1991, when the country last sought IMF assistance.

This structural fear triggered a global tech sell-off. US tech stocks fell sharply, and legacy firms like IBM saw 13% of decline amid concerns AI tools could replace legacy coding ecosystems.

2. Highest IT Contribution to the Nifty 50 

The Indian market sell-off has a distinctly sectoral flavour this session:

• The Nifty IT index fell by over 4% today, far outpacing losses in most other sectors.
• IT heavyweight stocks have been continuously pressured this month, reflecting structural concerns tied to AI disruption and slowing global tech demand.

Because the IT sector contributes 10.83% to the Nifty 50, weakness here pulls the overall index lower, amplifying volatility. Broad-based selling in these large-cap IT stocks today contributed heavily to the market fall.

3. Geopolitical Risk: US-Iran Tensions Pushing Crude Higher

Markets are also reacting to renewed geopolitical risks in the Middle East, particularly tensions between the United States and Iran:

• Crude oil prices climbed toward seven-month highs above $67 ber barrel, driven by fears that diplomatic talks and heightened tension could disrupt supply.
• Rising oil inherently dampens investor sentiment, as it raises worries about inflation, corporate input costs and slower growth, especially for import-dependent economies like India.

Global investors tend to turn risk-off when geopolitical tensions escalate, and oil prices rise, reducing appetite for equities and increasing demand for perceived safe havens such as bonds and gold. This dynamic exacerbates selling in stock markets even when no direct economic event has occurred.

4. Nifty F&O Expiry Today (Derivatives Roll-Over Volatility)

Today is a monthly F&O (Futures & Options) expiry day for the NSE Nifty 50. The impact of an options expiry can often magnify short-term trading volatility because:

• Traders adjust or close positions before expiry, leading to higher intraday volume and price swings.
• The rolling of derivative positions can intensify both buying and selling pressure, depending on expiries and hedging flows.

Before expiry, markets often trade cautiously or with fragmented momentum as traders hedge risk, especially when combined with negative macro triggers like geopolitical stress or sector sell-offs.

5. Pre-GDP Release Nervousness & Tentative Global Sentiment

Investors often enter data events with caution, especially major economic releases. On Friday, February 27, India is scheduled to release quarterly GDP figures. This event is widely viewed as a market catalyst:

• Ahead of major economic data releases, positioning tends to be more defensive as traders avoid committing bullish bets prematurely.
• If GDP data is weaker than expected, it could signal slower corporate growth, earnings pressure, or slower consumption, leading to additional downside risk.

Meanwhile, global sentiment remains tentative:

• The U.S. market recently experienced broad sell-offs tied to AI fears and tariff uncertainty, and these have contributed to risk-off positioning internationally.
• Mixed cues, where some Asian markets rise but others slip, mean that investor confidence globally remains fragile.

This kind of cautious macro environment typically translates into weak cross-asset sentiment, hurting equities.