Indian stocks set for pullback after sharp rally on oil slide, foreign inflows

Indian shares are expected to break their winning run on Friday as a rout in global markets triggered a cautious undertone for investors as they assessed the impact of ​the US Democratic win on AI regulations and foreign policy.

Both the Nifty ‌50 and the BSE Sensex have gained for six sessions in a row, culminating in their best session in seven months on Thursday, aided by lower oil prices and strong foreign fund inflows.

Foreign institutional investors bought ​stocks worth about 150 billion rupees ($1.6 billion), their biggest single-day net purchase in nearly ​six years, as investors rotated out of AI-linked trades globally.

GIFT Nifty futures were ⁠at 24,460 as of 7:49 a.m. IST, indicating a weaker start for the benchmark ​Nifty 50, which closed at 24,536.6 on Thursday.

“The indicated decline is relatively contained compared with the ​severe global selloff, suggesting that lower crude and India’s limited direct exposure to the AI-hardware trade are providing some insulation,” said Hariselvan Radhakrishnan, founder and CEO of HST Wealth.

Domestic markets are likely to face a volatile ​session with the possibility of consolidation and profit-booking following the benchmarks’ winning streak, according to ​two analysts.

The Nifty 50 and the BSE Sensex rose 2.4% and 2.6%, respectively, on Thursday after Brent crude ‌fell below $100 ⁠a barrel, with investors betting the Democrats’ sweep of the US midterm elections could hasten an end to the US-Iran conflict.

Sentiment turned risk-averse overnight after a steep selloff in US technology stocks. The Nasdaq sank 5.5%, while the Dow Jones and S&P 500 slid 3.4% and 4.4%, respectively, after ​weak Qualcomm results and ​concerns over slowing spending ⁠on AI infrastructure.

Asian markets followed Wall Street lower on Friday, with South Korea’s Kospi down 8% and Japan’s Nikkei falling 5%.