Indian IT surges as Kospi slumps 6% in Asian tech rout
Indian equities rallied over 1% as a severe sell-off in Asian semiconductor and AI stocks triggered a shift of foreign capital toward the country's IT sector.
Indian equities posted broad-based gains, with the Nifty 50 climbing 264 points, or 1.1%, to 24,250 and the Sensex advancing 888 points, or 1.2%, to 77,654. The session’s outperformance was driven by information technology stocks, which benefited from a sharp divergence in regional trading patterns.
While Indian indices rallied, major Asian hardware and artificial intelligence hubs suffered steep losses. The South Korean Kospi slumped 6%, bringing its weekly decline to nearly 19%. Taiwan’s benchmark dropped 3.8% on the day and 11% over the week. Heavyweight chipmakers bore the brunt of the sell-off, with SK Hynix falling 26.7% and Samsung Electronics dropping 22.5% over the past five sessions. The broader regional picture was mixed, with China advancing 0.4% and Hong Kong rising 2%, while Japan fell 1.5% and Europe's Stoxx 600 was down 0.3%.
Market participants expect this regional divergence to actively reshape near-term capital allocations. "The massive correction seen in the Kospi, and artificial intelligence and chip-making stocks is now expected to trigger a shift in flows from AI-focused stocks toward the Indian IT sector, and this has fuelled investor optimism," said Rajesh Palviya, head of research at Axis Securities.
The tech-driven rally found additional support from macroeconomic tailwinds. Crude oil prices eased toward $85 a barrel, a dominant factor for Indian markets throughout July. "The markets rallied on Wednesday, supported by the decline in crude prices toward the $85 a barrel mark, along with stock-specific action, as most Q1 results have been broadly in line, with no major negative surprises," said Sunny Agrawal, head of research at SBI Securities.
Palviya also credited light positioning on the first day of the new derivatives series, strong rollover activity, a stronger rupee, and expectations of relative peace in West Asia for the improved sentiment. Trader anxiety reflected this shift, with the India VIX falling 4.4% to 12.01.
Market breadth was firmly positive. Of the 4,425 stocks traded on the BSE, 2,533 advanced against 1,705 decliners. Higher beta assets participated in the move, as the Nifty Midcap 150 added 0.8% and the Nifty Small-cap 250 gained 1.3%.
Foreign capital underpinned the advance, with foreign portfolio investors net buying shares worth ₹2,982 crore. Domestic institutions purchased ₹998 crore. Technically, the Nifty's decisive close above 24,200 has established a new floor. "As long as the index holds above this range, it could move toward 24,350-24,400 in the near term," Palviya said, identifying the 24,000-24,100 zone as the immediate support level.
