Mumbai, Feb. 24 -- Battered technology stocks led a sharp sell-off on Dalal Street on Tuesday, dragging the benchmark indices lower as mounting fears of artificial intelligence (AI)-led disruption triggered fresh panic in a struggling IT sector.

Even as the benchmark BSE Sensex closed 1.28% down at 82,225.92, its peer Nifty 50 closed 1.12% lower at 25,424.65, weighed by a steep 4.7% fall in the Nifty IT index-its fifth straight session of losses.

The Nifty IT index has now plunged 24% so far this year, wiping out Rs.3.04 trillion in investor wealth on Tuesday alone.

Analysts warn that the structural impact of AI on India's $200-billion-plus IT export engine is only beginning to be priced in. While Indian IT firms are stepping up invest...