Indian equities are experiencing a renewed boost as investors, previously focused on the AI boom, begin to reconsider the market. The Nifty has achieved a four-week winning streak, its longest since late October, indicating growing confidence among investors. Contributing factors include a stabilized rupee and declining oil prices, making the Indian market more attractive.
While India hasn't been a primary beneficiary of the AI explosion, the recent cooling of the AI trade globally has prompted investors to re-evaluate sectors like Indian IT. This shift is seen as a tactical upside for the sector, especially after a 20% year-to-date decline in the Nifty IT index. The sector's relatively limited exposure to AI capital expenditure has insulated it from broader global sell-offs experienced by other tech sectors, such as the Philadelphia Semiconductor Index which fell 4.2%.
Foreign investors are reportedly buying into Indian stocks once again. The market's performance will heavily depend on the upcoming earnings season, with Tata Consultancy Services (TCS) kicking off the reporting period. Its commentary on the AI landscape will be closely watched by analysts and investors. Companies like Coforge have already seen significant gains, with a 10% jump after reporting strong revenue growth and an order book of $2.23 billion, much of it from AI-led services.
The overall market sentiment is also bolstered by improving monsoon conditions and moderately better Q1FY27 earnings, which strengthen India's growth outlook. The respite in crude oil prices, with Brent crude falling 1.7% in a day, has eased concerns over inflation and input-cost pressures, further supporting the market. The Indian rupee has also strengthened, recording its strongest single-day gain in over six weeks, aided by central bank intervention and reduced crude oil prices.
