Sensex jumps 2.1% as Indian stocks defy global chip rout

Indian stocks surged on Thursday, 15 October, defying a deepening selloff across Asian technology markets as buying in IT, private banks and Reliance Industries Ltd combined with lower oil prices and a stronger rupee to lift the benchmarks to two-week highs.

The Sensex jumped 1,533.72 points, or 2.1%, to close at 74,315.61. The Nifty 50 gained 374.65 points, or 1.7%, to 22,997.35 after briefly climbing above 23,000 during the session.

The rally marked a sharp reversal from Wednesday, when the Nifty fell 0.4%, and widened the gap between Indian equities and technology-heavy markets elsewhere in Asia.

Technology and private banking shares led the advance. The Nifty Private Bank index rose 1.9%, while the Nifty IT index gained 1.8%.

Tech Mahindra was the strongest Nifty 50 performer, rising 4.8%. ICICI Bank climbed 3.9% and Reliance gained 3.4%. Nestlé India was the biggest benchmark loser, dropping 7.8%.

Reliance also benefited from investor attention around Jio Platforms after the company set the terms for what is expected to become India’s largest initial public offering.

The strength in India contrasted sharply with another punishing session for Asian semiconductor stocks.

South Korea’s Kospi plunged as much as 8% on Thursday morning, triggering a sell-side trading halt as Samsung Electronics and SK Hynix extended losses driven by the global retreat from semiconductor and artificial intelligence-linked stocks.

The Kospi has fallen sharply over seven consecutive sessions.

Japan’s Nikkei 225 dropped as much as 3.8% in early trade, with chip-equipment companies among the biggest losers.

The selloff began in the US, where investors have become increasingly concerned about elevated technology valuations and the debt being used to finance the artificial intelligence infrastructure boom.

The S&P 500 fell 1.1% on Wednesday and the Nasdaq Composite dropped 1.9%, while the Dow Jones Industrial Average edged 0.1% lower. US stock futures remained weak on Thursday, with Nasdaq 100 futures down about 0.7% in Asian trading.

A widely followed US semiconductor index has lost about $1.6 trillion in market value over six consecutive sessions even as companies including Samsung and ASML continue to report strong underlying demand.

The immediate trigger for the latest leg of the selloff was US inflation. Consumer prices rose at their fastest pace in five months in September, pushing Treasury yields higher and reviving concern that the Federal Reserve may need to keep interest rates elevated for longer.

That is particularly uncomfortable for AI infrastructure companies because their businesses require enormous amounts of capital.

CoreWeave shares plunged 16% on Wednesday, while Nebius fell 11%, Oracle dropped 9% and Dell Technologies lost 11%. Together, the four companies erased roughly $80 billion in market value.

CoreWeave has become a focal point for those concerns. The cloud-computing company has about $48 billion in debt and commitments, while yields on some of its bonds have risen toward 15%, levels associated with highly stressed borrowing.

The rise in financing costs has forced investors to reconsider one of the assumptions behind the AI rally: that companies can continue spending hundreds of billions of dollars on data centers, semiconductors and electricity while capital remains readily available.

The concern is less acute for cash-rich companies such as Microsoft, Alphabet, Meta and Amazon, which can finance much of their investment from operating cash flow.

It is more serious for heavily leveraged AI infrastructure businesses and hardware suppliers whose valuations depend on several more years of exceptional capital spending.

India has comparatively little direct exposure to semiconductor manufacturing in its main stock indexes.

Banks, financial companies, energy groups, consumer businesses and IT services firms carry far greater weight in the Sensex and Nifty than chipmakers do in benchmarks in South Korea, Taiwan and Japan.

Oil also moved in India’s favor on Thursday.

Brent crude fell more than 1% in early trading to about $104.71 a barrel, while West Texas Intermediate dropped to about $94.17. Oil remains high by recent historical standards, but the retreat eased some of the pressure on an economy that imports most of the crude it consumes.

Lower oil prices can reduce pressure on India’s inflation, current-account deficit and currency.

The rupee strengthened for a fourth consecutive session on Thursday, closing about 0.1% higher at 95.0550 against the dollar. It has gained roughly 2% this week, helped by weaker oil prices, a softer dollar, the equity rally and measures from the Reserve Bank of India aimed at easing pressure in the foreign-exchange market.

The RBI has intervened aggressively to support the currency. Bankers estimate India has already deployed roughly half of the more than $140 billion raised through special measures earlier this year to bolster its foreign-exchange defenses.

Technology shares have meanwhile extended a rebound that began after HCLTech’s quarterly results earlier in the week. The Nifty IT index had already risen sharply over the preceding sessions before adding another 1.8% on Thursday.

That rebound has helped offset some of the weakness that Indian technology stocks suffered earlier this year as investors worried about US corporate spending and the effect of AI on traditional outsourcing work.

Thursday’s rally was not entirely broad-based, however. Smaller companies lagged the benchmark indexes, suggesting much of the buying remained concentrated in large-cap stocks.

Foreign investors have also remained cautious. They sold ₹1,857.44 crore of Indian equities on Wednesday, while domestic institutional investors bought ₹2,670.44 crore.