Indian Equities Rally on Foreign Inflows and Resilience to Global Tech Selloff
Indian benchmark indices surged as foreign institutional buying and insulation from the global semiconductor downturn offset rising Middle East tensions.
The Bombay Stock Exchange Sensex jumped more than 800 points to 77,550, while the Nifty 50 crossed the 24,200 mark in early Wednesday trading. The rally added approximately 3 lakh crore rupees to the total market capitalization of listed companies, bringing the aggregate value to 482 lakh crore rupees.
The broad-based advance defied escalating geopolitical tensions in the Middle East, which pushed global oil prices up by more than 4 percent. Instead, Indian markets found support from a reversal in foreign institutional investor flows and a notable decoupling from the severe technology selloff battering Asian peers.
While South Korea’s Kospi plummeted around 9 percent and Japan’s Nikkei fell over 4 percent amid mounting artificial intelligence bubble concerns, Indian IT stocks led domestic gains. Companies such as Infosys, Tata Consultancy Services, and HCL Technologies rose up to 3 percent, benefiting from India’s limited exposure to the capital-intensive AI infrastructure boom.
Foreign institutional investors returned as net buyers on Tuesday, purchasing 755 crore rupees worth of Indian equities after four consecutive sessions of heavy selling. Concurrently, the rupee strengthened by 12 paise to 95.70 against the US dollar, supported by anticipated Reserve Bank of India intervention.
Macroeconomic Headwinds and Fed Watch
Currency analysts expect the rupee to trade between 95.50 and 96.25 in the near term. Jateen Trivedi, a research analyst at LKP Securities, noted that the currency will continue taking cues from crude oil prices, the US Dollar Index, and foreign institutional flows alongside the Fed’s policy decision.
The US central bank is widely expected to hold interest rates steady during its Wednesday meeting. This outlook persists despite growing inflation anxieties exacerbated by the escalating conflict in the Middle East.
VK Vijayakumar, chief investment strategist at Geojit Financial Services, warned that a surprise early rate hike by the Fed would carry negative implications for Indian markets. He explained that rising US yields would likely divert foreign capital away from emerging market equities and into American bonds.
Vijayakumar added that while the sharp correction in Asian chip stocks presents an advantage for India, sustained foreign buying requires clarity on crude prices and the monsoon season. Market technicians observed that the Nifty successfully defended its 23,891 pivot level, though consistent trading above 24,100 is necessary to confirm further upside momentum.
