Stories
IT Index Surges 2.5 Percent As Analysts Call AI Stock Correction A Positive For India
- •The Nifty IT index rose 2 percent on October 15, extending its three-session gains to approximately 8 percent and reaching a one-month high.
- •Major IT players like Infosys, TCS, and HCLTech each added 3 percent following strong quarterly earnings reports.
- •Analyst VK Vijayakumar from Geojit Investments noted that the global correction in AI stocks could reverse persistent foreign outflows from Indian markets.
- •Broader Asian markets and Wall Street experienced a sell-off in chip and AI-linked stocks driven by higher-than-expected US inflation data.
Key Questions Answered
The Nifty IT index climbed 2% on October 15, bringing its three-session rise to about 8% and reaching its highest level in over a month at 30,856.90 points. This was driven by healthy earnings from Tata Consultancy Services and HCL Technologies, alongside a steep fall in Asian and Wall Street artificial intelligence infrastructure stocks that bolstered market sentiment.
According to VK Vijayakumar, chief investment strategist at Geojit Investments, the correction in AI stocks is considered a positive for Indian markets because it could halt and potentially reverse persistent, record foreign outflows. FIIs who were previously selling Indian stocks to buy AI stocks may shift their focus back under favorable conditions.
A hotter-than-expected US inflation print, which spiked from 3.4% in August to 3.7% in September, increased the likelihood of another Federal Reserve rate hike in October. This sparked massive selling on Wall Street, driving a 1.88% correction in the Nasdaq, with AI and chip stocks taking the heaviest hit.
