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AI Fear: The Newest Shock to Hit Indian Software Stocks
15 Feb
Summary
- Market shocks, from financial crises to AI fears, have repeatedly rattled stock prices.
- Past events include the 2008 crisis, taper tantrum, and Covid-19 pandemic impacts.
- Despite panic, markets have historically recovered after such disruptive events.
The Indian software sector is currently grappling with an "AI crisis," marking the latest in a recurring pattern of market shocks. These events have consistently created panic and negatively impacted stock prices.
Past significant market disruptions include the global financial crisis of 2008, which severely affected risk assets. Five years later, the US "taper tantrum" caused volatility in emerging market currencies and equities. India experienced demonetisation in late 2016, followed by the sharp market downturn in March 2020 due to the Covid-19 pandemic.
More recent shocks encompass the fear sparked by the Russia-Ukraine war in 2022, the Adani-Hindenburg controversy, and tariff-related market fluctuations over the last year. Despite the immediate panic these events induce, historical data suggests that market participants eventually recover from the shock, and stock markets tend to stabilize and resume their normal functioning.
