Sensex Jumps 718 Points: Why India Gains as AI Trade Cools

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.

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Sensex Jumps 718 Points: Why India Gains as AI Trade Cools

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“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.

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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)