Indian shares buck AI carnage in Asia as IT stocks lead gains

Indian equities jumped over 1% on Wednesday, bucking the carnage in AI-linked markets across Asia as investors likely rotated out of crowded AI trades into other emerging markets such as India.

The Nifty 50 rose 1.1% to 24,250.2, while the BSE Sensex gained 1.16% to 77,654.6. This was Nifty 50’s biggest daily percentage jump since June 12.

South Korean stocks tumbled for a second straight session as the AI-driven rally unravelled, while Japan’s Nikkei fell to a two-month low.

The losses were led by chipmakers after South Korea’s SK Hynix, which reported a six-fold jump in profit, failed to stem the panic as the results lagged lofty expectations.

The sharp correction in chip stocks in South Korea is an advantage for India as it can revive foreign investors’ interest in non-AI markets, said VK Vijayakumar, chief investment strategist at Geojit Investments.

Foreign investors have bought Indian shares worth over $1 billion so far this month, after four consecutive months of selling.

Information technology stocks, which bore the brunt of heavy sell-off due to fears of AI disruption, led the rally in India.

Nifty IT index jumped 2.3%, extending its four session gains to 9.1%.

“We are seeing a rebound in IT sector, after a 30%-50% correction in most of the stocks, as investors re-assess the impact of AI on IT services,” said Aamar Deo Singh, senior vice president at Angel One.

Investors await U.S. Federal Reserve’s policy decision later in the day. The U.S. central bank is largely expected to hold rates steady, but traders are pricing in at least one hike by the end of the year.

Fourteen of the 16 major sectors advanced. The broader small-caps and mid-caps rose 1.5% and 0.8%.

Among stocks, infrastructure major Larsen & Toubro gained 2.6% after posting a quarterly profit rise on strong order inflows.

Hindustan Unilever jumped 4.7%, reversing some of the 7% losses after earnings on Tuesday, as analysts remained optimistic about growth.