Sensex edges higher, Nifty slips as India withstands global AI stock rout

• Sensex edged higher while Nifty slipped marginally, as Indian equities showed resilience against a sharp global technology selloff

• Provisional data showed foreign investors bought Rs 13,801.83 crore of Indian equities on Thursday, supporting hopes of further inflows

• Concerns over AI spending and possible restrictions on new US data centres hit global markets, although Nomura considers a federal moratorium unlikely

Indian equities resisted the worst of a global technology selloff on Friday, with the Sensex trading modestly higher and the Nifty edging lower as strong foreign buying and encouraging corporate earnings supported sentiment.

The BSE Sensex stood at 79,460.30, up 150.29 points, or 0.19 per cent. The Nifty was trading at 24,516.10, down 20.50 points, or 0.08 per cent.

The relatively steady performance contrasted with steep declines across Asian markets following a Wall Street rout that erased more than $2 trillion in market value. Investors were reassessing the outlook for artificial intelligence spending amid concerns about potential restrictions on new US data centres following Democratic gains in the midterm elections.

The divergence fuelled expectations of a “reverse AI” trade, with investors potentially shifting allocations from markets heavily exposed to artificial intelligence towards India and other alternatives within emerging markets.

Provisional figures showing foreign portfolio purchases of Rs 13,801.83 crore on Thursday strengthened that view.

V K Vijayakumar, chief investment strategist at Geojit Investments, said India had been among the markets least affected by the global selloff. Foreign institutional investors had purchased equities worth Rs 35,781 crore over the previous five trading sessions, he said.

He expected continued overseas buying to support the market despite selling and profit-taking by domestic institutional investors. Better-than-expected earnings also provided a fundamental basis for the recent rally, he added.

Mahindra & Mahindra led Nifty gainers, rising 3.68 per cent to Rs 3,242.60, while Titan advanced 2.32 per cent to Rs 4,946.90. Both benefited from stronger-than-expected second-quarter results.

Bharti Airtel, HCL Technologies, Tata Consultancy Services and Infosys gained between 1.5 per cent and 1.85 per cent. IT shares attracted buying amid expectations that a slowdown in AI-related investment could benefit the sector.

Vijayakumar said the recent advance had been concentrated in large companies whose valuations had become more attractive. He pointed to Thursday’s 2.6 per cent rise in the Sensex, compared with a gain of just 0.67 per cent in the Smallcap 100 index, as evidence of where investors were directing funds.

Elsewhere in Asia, South Korea’s Kospi fell as much as 8.8 per cent, triggering a circuit breaker. Samsung and SK Hynix declined more than 6 per cent each. Japan’s Nikkei dropped 5.7 per cent, while Taiwan’s market also suffered heavy losses.

The declines followed a 6.4 per cent overnight fall in the Nasdaq 100, which wiped out about $2.3 trillion in value in its worst session since March 2020. The broader Nasdaq fell 5.6 per cent.

Beyond the political uncertainty, elevated interest rates, high oil prices and mixed quarterly results from US AI companies have sharpened questions about whether enormous investment commitments will deliver sufficient returns.

Nomura, however, cautioned against assuming that Democratic electoral gains would lead to a nationwide halt in data centre development.

The brokerage said a federal moratorium appeared unlikely because of differences within the Democratic Party and the possibility of a presidential veto. Temporary restrictions at state level remained possible.

Candidates supporting a pause in new AI data centre permits until regulations were established had won in Texas and Georgia, Nomura said. In Ohio, candidates from both parties supported conditional approvals.

No governor-elect in a major data centre state had committed to a permanent ban, it added. The policy debate instead centred on electricity costs, oversight, semiconductor supplies to China and export controls on chipmaking equipment.

Despite India’s relative resilience, Hariselvan Radhakrishnan, founder and chief executive of HST Wealth, warned that a prolonged global retreat from risk could eventually spread to domestic sectors through foreign selling, even where companies faced no direct impact on earnings.

With agency inputs