The rupee too continued its downward spiral, hitting a fresh low of 95.75 against the US dollar before closing at 95.63 — the lowest it has ever ended a session.Key stock indices fell nearly 2% on Tuesday, largely driven by a selloff in IT stocks on AI-related fears, with investor sentiment remaining downbeat on account of the ongoing West Asia crisis showing no sign of abating and Prime Minister Narendra Modi’s austerity advisory to citizens.The rupee too continued its downward spiral, hitting a fresh low of 95.75 against the US dollar before closing at 95.63 — the lowest it has ever ended a session.The Nifty IT sectoral index fell 3.7% to its lowest level since May 2023 after AI giant OpenAI said on Monday that it is setting up a company to help organisations deploy AI systems. The IT sector has already been hit by concerns of ‘AI-deflation’ to its order books and loss of future business due to Anthropic’s success with its Claude suite of models.The Nifty IT is down over 25% so far in 2026. On Tuesday, big names like TCS, Wipro, and Infosys lost 3-4%, dragging down BSE’s Sensex by 1.9% to 74,559.24, while the Nifty 50 ended 1.8% lower at 23,379.55.Meanwhile, crude oil prices rose past $105 a barrel, exerting pressure on the rupee, after US President Donald Trump on Monday called Iran’s response to the US’ latest offer “garbage”.“The market has been cold due to Trump’s and our PM’s comments, as the conflict is expected to stretch on now. Geopolitical developments will continue to drive the market direction, and volatility is expected to remain high,” a research head at a domestic broking firm said. The India VIX, a measure of market volatility, gained nearly 4% Tuesday.“Stalled US-Iran negotiations, continued disruption around the Strait of Hormuz driving a fresh surge in energy prices, a rupee slipping to record lows, persistent FII outflows, and broad-based weakness across sectors including IT, defence and realty collectively triggered a decisive sell-off through the session,” said Ponmudi R, CEO of Enrich Money.Story continues below this adMany other global markets also fell after Trump’s comments, with hopes of a longer-term ceasefire in West Asia looking bleak. The US markets had lost up to 1%. The South Korean market ended over 2% lower. European shares also remained lower in early trade Tuesday.While the Centre has so far shielded consumers from elevated global energy prices — data released Tuesday showed retail inflation edged up only slightly to 3.48% in April from 3.4% in March — speculation is rife that the pump price of petrol and diesel may be increased, considering the losses oil marketing companies are having to bear. Speaking at the CII Annual Business Summit on Tuesday, Petroleum Minister Hardeep Singh Puri said the government will have to take a view at some point on how long public sector OMCs can continue to suffer losses by selling fuel below market price, with total losses of the three refiners-cum-fuel retailers projected at Rs 1 lakh crore in the April-June quarter at current price levels.IT apart, the NSE’s other sectoral indices also ended lower, with consumer durables, real estate, and financial services some of the worst hit. Shares of jewellery retailers slumped for the second straight day following Modi’s call on Sunday and Monday to avoid buying gold for a year. The request for austerity has rattled markets, with analysts cautioning that Modi’s appeal is a sign of “potential policy shift ahead”.