Key Highlights

  • Strong start: Sensex opened 718.71 points (0.97 per cent) higher at 75,178.24, and Nifty rose 169.20 points (0.73 per cent) to 23,222.30.
  • Energy leads: Nifty Oil & Gas gained more than 2 per cent. Nifty Auto rose 0.77 per cent and Nifty IT 0.51 per cent, while Realty and Media slipped.
  • Global relief: Brent crude fell 3 per cent to $109.97 per barrel, and the US 10-year bond yield eased to 4.93 per cent.
  • AI shake-out: Nasdaq dropped 2.8 per cent on Friday after disappointing Intel and Amazon results. Experts see India benefiting as a “counter-AI play.”
  • Budget hopes: Analysts say the market has begun pricing in a possible overhaul, or abolition, of LTCG tax in the coming Budget.

Asian markets were weak on Monday morning, and Wall Street was coming off a bruising Friday. Indian equities went the other way. Benchmark indices opened about 1 per cent higher, helped by buying in energy, auto and IT stocks. The reason they gained has less to do with domestic news than with a shift in what global investors are now afraid of.

At the opening bell, the Sensex was up 718.71 points, or 0.97 per cent, at 75,178.24. The Nifty gained 169.20 points, or 0.73 per cent, to reach 23,222.30. Energy stocks led the rally: Nifty Oil & Gas jumped more than 2 per cent, Nifty Auto added 0.77 per cent, and Nifty IT rose 0.51 per cent. Nifty Realty fell 0.74 per cent and Nifty Media slipped 0.06 per cent.

Why the AI Sell-Off Matters for Dalal Street

The most interesting part of the move started in the US. On Friday, the Nasdaq had its steepest one-day fall since June 5 after disappointing results from Intel and Amazon raised fresh worries about how much companies are spending on artificial intelligence.

For much of the past cycle, global money has gone into AI-linked technology stocks, often at the expense of markets like India, which has few large listed AI companies. Market experts now argue that this works in India’s favour.

“Perhaps more important than these external tailwinds is the sharp weakening of the AI trade, which pulled down the Nasdaq by 2.8 per cent last Friday. The weakening trend in AI trade is beneficial for India which is widely regarded as a counter-AI play,” the experts said.

Put simply, if investors start taking money out of crowded AI bets, India’s consumption, banking and industrial stories could look more attractive.

Crude oil is the other source of relief. “Externally, the slight cooling of Brent crude prices from last week’s high of $118 to $110 now is a relief. Equally important is the decline in the US 10-year bond yield to 4.93 per cent,” they noted. Brent was later trading 3 per cent lower at $109.97 per barrel, and US West Texas Intermediate (WTI) fell about 3 per cent to $100.81. For a country that imports most of its oil, every dollar off crude helps.

Domestic numbers also support the bullish case. Experts pointed to 17.94 per cent credit growth and strong GST collections in October as signs of “a resilient economy gathering momentum.”

The Budget is another factor. “Another strong positive which can drive the market up is the rising expectations surrounding a thorough rejig of the LTCG tax in the coming Budget, most likely its abolition. The market, it appears, has started discounting this. In brief, for now, it is an advantage for bulls,” analysts said.

The technical setup shows the same cautious optimism. Nifty’s RSI improved to 53.50, above its average of 45.97, and a put-call ratio of 1.24 points to a positive derivatives setup. Immediate support is placed at 22,900–23,000, with resistance at 23,200–23,250. Analysts say a sustained move above the 50-day EMA would make the recovery stronger.

The key question now is whether Monday’s rally lasts. Crude is still above $100, and US yields are still close to 5 per cent. But if the global turn away from AI stocks continues, India could gain more as investors look for markets that are not tied to the AI trade.

(With inputs from IANS)