Although geopolitical tensions in West Asia and elevated crude oil prices continue to weigh on domestic equities, global markets have scaled fresh record highs amid a renewed rally in AI-linked stocks and resilient corporate earnings.
The rebound in the AI trade has fuelled a rally in technology stocks globally, while better-than-expected first-quarter earnings have brightened the outlook and boosted investor confidence that massive AI spending is yielding results. Stocks across the AI ecosystem have emerged as hot picks, with reports also indicating growing interest from overseas investors in the sector.
A handful of technology stocks have led key Asian markets to record performances. South Korea’s benchmark KOSPI index surged to a record closing high above 8,200 in today’s trade and has gained over 90% so far in 2026. The rally was largely driven by strong gains in Samsung Electronics and SK hynix. Japan’s Nikkei has also advanced 25% this year.
The tech-heavy US Nasdaq has rallied 15% over the last five months, with the gains largely powered by chip stocks such as Nvidia.
Indian equities, however, remain relatively low on AI investment opportunities and continue to grapple with weak annual earnings growth. As a result, they have emerged among the worst-performing major global markets this year, with the Nifty 50 and BSE Sensex down nearly 9% and 11%, respectively.
AI-driven rally continues to power global equities
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the ongoing bull rally in global markets continues to show strong momentum, with the S&P 500, Nasdaq, and Nikkei scaling new record highs, while markets such as KOSPI and Taiex are witnessing buying on declines.
According to him, as long as this trend persists, Indian markets are likely to remain under pressure due to continued FII selling. He also noted that markets appear to be overlooking the concentration risk associated with the ongoing AI-driven rally, adding that while India will eventually regain attractiveness for foreign investors, the timing remains uncertain.
On the domestic earnings front, Vijayakumar highlighted that Q4 results have largely come in better than expected, with midcaps outperforming largecaps.
He pointed out that profit growth has outpaced revenue growth, though sluggish revenue expansion reflects weak demand conditions in the economy. He added that fairly valued financial stocks offer good prospects, while pharmaceutical companies continue to show resilience due to inelastic demand and strong export performance.
Fuel-sensitive sectors may remain under pressure amid higher oil prices
Hariprasad K, Sebi-registered Research Analyst and Founder of Livelong Wealth, said global sentiment remains fragile as geopolitical tensions in West Asia continue to influence investor risk appetite.
He noted that fresh US military strikes in southern Iran have weakened hopes of an immediate diplomatic resolution, reviving concerns over energy supply disruptions.
In an oil-import-dependent economy like India, elevated crude oil prices directly impact inflation expectations, corporate input costs, fiscal stability, and currency sentiment. He added that higher crude prices continue to keep pressure on the Indian rupee, which remains vulnerable near historically weak levels against the US dollar.
Sectors with high fuel sensitivity, including automobiles, paints, aviation, logistics, and consumer-facing businesses, may continue to witness cautious investor positioning amid rising cost pressures.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
