Indian equities rise as AI selloff spares tech, banks
Indian benchmark indices defied a broader Asian slump, supported by strong banking and IT sectors ahead of major earnings, though underlying market breadth remained weak.
Indian equities posted strong gains on Friday, diverging from a sharp sell-off across broader Asian markets. The NSE Nifty 50 climbed 1.1% to close at 24,334.3, while the BSE Sensex advanced 1.25% to end at 78,151.45.
The outperformance was largely driven by the country's distinct sectoral composition. “Our markets were insulated from the Asian selling due to the lack of AI play,” said Sham Chandak, head of institutional equities at Elios Financial Services. The Nifty IT index added 1.75%, with Chandak noting that global jitters around artificial intelligence have allowed Indian IT services to catch a breath alongside better-than-expected earnings.
Banking stocks were the other primary driver, with the Bank Nifty rising 1.6%. Investors are positioning ahead of Saturday's earnings releases from major lenders including HDFC, ICICI, Kotak and Axis. “The market is going in with an expectation of good numbers,” Chandak said. The Auto index also contributed, climbing 1.2%.
However, the headline gains masked underlying weakness in the broader market. The Nifty Midcap 150 fell 0.4% and the Nifty Smallcap 250 declined 0.6%, posting weekly losses of 0.9% and 0.6% respectively. Declining stocks outnumbered advancers by more than 950 issues on the BSE, while foreign investors sold 376 crore of shares that were absorbed by domestic institutional buyers of 1,018 crore.
Derivative and technical indicators suggest the blue-chip rally has room to run. Ashish Katwa, technical analyst at Stoxbox, noted the Nifty formed its strongest bullish candle since June 12 after three sessions of consolidation. “Options data continues to support the bullish outlook, with fresh put writing at the 24,200 and 24,000 strikes establishing a strong support base,” Katwa said. He pointed to call unwinding at 24,500 as a signal for further upside, with immediate resistance at the 24,600 and 24,700 strikes.
The India VIX, a measure of expected volatility, edged up 2.1% to 13.15 despite the rally. “The bias remains positive for next week, with any dip towards 24,200-24,250 presenting a buying opportunity as long as the Nifty holds above 23,970,” Katwa said, identifying 24,500 and 24,700 as immediate upside targets.
