Sensex reclaims 85K: India indices near peak as global AI rally fades

Sensex reclaims 85K: India indices near peak as global AI rally fades

A selloff in major artificial-intelligence stocks helped steer investors toward Indian equities on Wednesday, lifting benchmark indices to within a whisker of all-time highs. 

The Sensex rose 514 points, or 0.6 per cent, to 85,187, closing above the 85,000 mark for the first time in nearly 14 months, while the Nifty 50 added 143 points (0.6 per cent) to finish at 26,053. Both gauges now sit less than 1 per cent below their peak levels. 

With AI-linked shares in the US (Nasdaq), Taiwan and South Korea tumbling about 5 per cent over the past five sessions, investors have rotated into India. Foreign portfolio investors bought about ₹1,581 crore worth of equities on Wednesday, extending November’s net inflows to ₹1,695 crore. 

 

In India, by contrast, technology stocks set the pace. The Nifty IT index climbed 3 per cent, its biggest single-day gain since May 12, powered by HCLTech (up 4.3 per cent), Infosys (3.74 per cent) and Tata Consultancy Services (2 per cent).

 

According to analysts, Indian IT stocks, among laggards over the past year, are drawing renewed interest as investors reassess the lofty valuations of global AI leaders. “The fading AI rally is prompting investors to reallocate funds to traditional IT services companies,” said G Chokkalingam, founder of Equinomics. He added that weakness in small and midcap stocks is also pushing investors toward larger index constituents, though he sees the move as tactical with limited upside. 

Indian equities have been gaining momentum since October, supported by steady September-quarter earnings and optimism over a potential India-US trade deal. The anti-AI rotation may add further support. Alexander Redman, CLSA’s chief equity strategist, said earlier this week that India remains “one of the last true emerging markets” offering exposure to demographic and productivity gains, and could therefore draw incremental foreign flows.

 

Market breadth was mixed, with 2,427 stocks declining and 1,757 advancing. The Nifty Smallcap 100 fell 0.43 per cent, while the Nifty Midcap 100 gained 0.2 per cent. The total market capitalisation of BSE-listed companies rose ₹1.1 trillion to ₹476 trillion.