Stock market today: Indian equities staged a strong rebound on Wednesday, outperforming most Asian markets even as geopolitical tensions in the Middle East intensified and oil prices climbed sharply. The rally came at a time when investors across the region continued to exit technology and semiconductor stocks amid growing concerns that the global artificial intelligence (AI) investment boom may not generate the expected returns.
The benchmark indices rose more than 1% each, lifting investor wealth by nearly ₹3 lakh crore. The gains were broad-based, with buying interest visible across heavyweight stocks and the broader market, even as volatility eased.
The Sensex surged 880 points, or 1.1%, to an intraday high of 77,646.09, while the Nifty 50 climbed 259 points, or 1.1%, to touch 24,244.55. The rally pushed the total market capitalisation of all BSE-listed companies to around ₹482 lakh crore.
Among the Sensex constituents, Infosys, Hindustan Unilever, Tata Steel, Larsen & Toubro (L&T) and TCS emerged as the biggest gainers, advancing by as much as 5%. On the other hand, Adani Ports, Bharat Electronics, Power Grid, Mahindra & Mahindra (M&M) and InterGlobe Aviation (IndiGo) traded in the red.
Market sentiment also improved on the risk front. India VIX, the volatility gauge, declined more than 3% to 12.18, despite renewed geopolitical uncertainty. The broader market participated in the rally as well, with the Nifty Midcap 100 and Nifty Smallcap 100 indices gaining up to 1%.
1. IT stocks surge
One of the biggest drivers of Wednesday’s rally was India’s relative resilience to the ongoing global selloff in AI-linked technology stocks.
Interestingly, domestic IT companies such as Infosys and HCL Tech were among the top performers even as semiconductor-heavy markets across Asia remained under intense pressure.
The weakness overseas was led by South Korea, where the benchmark index plunged 9%, extending Tuesday’s 11% decline and putting it on course for its steepest two-day fall on record. Chipmaker SK Hynix slumped as much as 20% after its 557% jump in quarterly profit still failed to meet elevated market expectations. Shares of Samsung Electronics, which is scheduled to report earnings on Thursday, also dropped as much as 14%.
The selling was not confined to South Korea. Japan’s Nikkei 225 fell more than 4%, while Taiwan’s benchmark index also declined by over 4%.
Unlike these markets, India has relatively fewer large listed companies directly exposed to the global AI infrastructure investment cycle. That has insulated domestic equities from the sharp correction triggered by rising doubts over whether hyperscalers’ massive AI spending will ultimately deliver adequate returns, fuelling concerns about a potential AI bubble.
2) Stronger rupee
The Indian rupee strengthened further on Wednesday, appreciating 12 paise to 95.70 against the US dollar in early trade. The currency has now gained support for three consecutive sessions, with traders attributing the stability largely to the Reserve Bank of India’s likely intervention in the foreign exchange market.
A firmer rupee typically improves market sentiment by easing concerns over imported inflation and reducing pressure from currency volatility.
Looking ahead, market participants will closely monitor a combination of global and domestic factors to gauge the rupee’s next move.
“Going forward, the rupee will continue to take cues from crude oil prices, the US Dollar Index, FII flows, and the upcoming US Federal Reserve policy decision. Technically, the rupee is expected to trade in the 95.50-96.25 range in the near term,” said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities.
3) Return of foreign investors
Another factor supporting Wednesday’s rally was the return of foreign institutional investors (FIIs) as net buyers after several sessions of persistent selling.
According to provisional data from the National Stock Exchange (NSE), FIIs purchased equities worth ₹755 crore on Tuesday. The buying followed four straight sessions of heavy selling by overseas investors.
Although the inflow was relatively modest compared with the magnitude of recent outflows and does not indicate Wednesday’s activity, a shift from selling to buying is often viewed as an early sign of improving risk appetite. Such reversals tend to boost investor confidence, particularly when domestic markets are attempting to recover from recent weakness.
4) Fed policy outcome in focus
Global investors are also awaiting the outcome of the US Federal Reserve’s Federal Open Market Committee (FOMC) meeting, scheduled for later on Wednesday.
The consensus expectation is that the Fed will leave interest rates unchanged. However, policymakers continue to grapple with persistent inflationary pressures, making the central bank’s commentary on the future policy path just as important as the rate decision itself.
The announcement assumes added significance as markets assess the inflationary impact of rising crude oil prices triggered by the escalating conflict in the Middle East. Any indication of a more hawkish stance from the Fed could influence global capital flows and investor sentiment across emerging markets, including India.
Market outlook
According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the Indian market could gradually break out of its prolonged range-bound phase, supported by reasonable valuations in frontline stocks.
“This might take time. Big conviction buys by FIIs need clarity on the trajectory of crude prices and the progress of the monsoon. The sharp correction in chip stocks in South Korea is an advantage for India.”
Vijayakumar added that the Fed’s policy announcement will remain the key near-term trigger for global markets. While he expects the central bank to keep rates unchanged this time despite inflation concerns, he believes policymakers could opt for a rate hike at the subsequent meeting.
“However, if the Fed goes for a surprise early hike, that will have slightly negative implications for Indian markets. Rising yields in the US will drive FIIs to US bonds, away from EM equities,” he warned.
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.
