Nifty Pushes Into the 23,500-23,600 Wall as India Shrugs Off Asia's AI Sell-Off; Kospi Drops 2.4%

Indian equities moved in the opposite direction to much of Asia on Tuesday morning. While investors in Seoul and Tokyo continued to dump technology shares over worries about heavy spending on artificial intelligence, the Sensex and Nifty opened higher for a fourth straight session and pushed straight into a price zone that traders had flagged as the main hurdle for this rally.

By 9:19 AM, the Sensex was up 553 points, or 0.73%, at 76,245.95, and the Nifty 50 had gained about 133 points to 23,568.95. The advance broadened over the next half hour. The Sensex was later up as much as roughly 800 points near 76,500, and the Nifty briefly traded above 23,600.

The divergence with Asia

The contrast with the region was sharp. South Korea's Kospi, heavy with chipmakers that have ridden the global AI boom, fell about 2.4% in early trade, and Japan's Nikkei slipped about 0.3%. Overnight on Wall Street, the Nasdaq Composite lost 1.07% and the S&P 500 fell 0.5% as investors questioned whether companies such as Oracle and the big chipmakers can earn a return on their enormous data-centre budgets. The Dow, with less exposure to technology, rose about 0.4%.

India's relatively small weighting in AI hardware has worked in its favour during this rotation. Money that is leaving crowded semiconductor trades in North Asia does not need to flee Indian markets, which are driven more by banks, consumer companies and energy.

What is doing the lifting

Consumer goods stocks led the morning, with the Nifty FMCG index the best-performing sector. Nestle India was among the top Nifty gainers, and Marico jumped about 6% after raising its full-year guidance. InterGlobe Aviation, the parent of IndiGo, and Shriram Finance were also among the leaders. Airlines are a direct beneficiary of cheaper fuel, and Brent crude was trading near $104 a barrel after falling about 7% on Monday, even after a small rise on reports of US strikes on Iran's Qeshm Island.

Pharmaceutical and healthcare stocks were the weakest sectors, a reminder that the rally is not uniform.

Flows and the rupee

Foreign institutional investors bought a net Rs 3,114.68 crore of Indian shares in the cash market on Monday, their second day of buying in a row, while domestic institutions sold a net Rs 392 crore, according to provisional data. That is a notable shift for a market that has seen heavy foreign selling this year. The rupee also firmed to about 94.64 against the dollar in early trade, from Monday's close of 94.84.

The level that matters

The Nifty finished Monday at 23,440.80, at its high of the day and above its 50-day exponential moving average. The 23,500 to 23,600 band has been widely watched as resistance, and Tuesday's open took the index straight into it. A close above that zone would suggest the recovery has more room. A failure would put support near 23,285 and then 23,130 back in focus. India VIX, the market's gauge of expected volatility, closed at 15.50 on Monday, still elevated, which suggests traders are not yet treating the bounce as settled.

The rest of the day carries several potential catalysts. State Bank of India, Bajaj Finserv and Solar Industries are among the companies reporting September-quarter results, and the US midterm elections take place later today, with results arriving overnight in Indian time. Investors who want a broader view of how commodities and currencies have shaped this market can find it in the latest Market Pulse issue.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.