Even as heavy sell-offs in computer chip stocks and other artificial intelligence (AI) winners dragged US and Asian markets lower, Indian equities rallied sharply on Friday, driven by strong buying in large-cap stocks. Meanwhile, oil prices continued to climb amid the war with Iran.
The global sell-off gathered pace as benchmark indexes fell 6.5% in Taipei, 4% in Tokyo and 3% in Shanghai, with semiconductor stocks leading the decline after Taiwan Semiconductor Manufacturing Co. tumbled 7.3%.
Wall Street remained under pressure on Friday, with the S&P 500 falling 0.8%, putting it on course for its first weekly decline in three weeks and only its third since March. The benchmark index had come within 0.5% of its record high just days earlier. The Dow Jones Industrial Average slipped 40 points, or 0.1%, while the Nasdaq Composite tumbled 1.7%, Associated Press (AP) said in its Friday evening report.
Semiconductor stocks continued to lead the sell-off as investors remained concerned that chipmakers' valuations had run too far ahead of fundamentals. Market participants also questioned whether the explosive demand for memory chips and processors, fuelled by the artificial intelligence (AI) boom, could be sustained if AI fails to deliver the expected gains in profitability and productivity. Nvidia weighed the most on the S&P 500, falling 2.8%, while Applied Materials dropped 6.1%, trimming its year-to-date gain to below 105%, the AP report added.
India’s equity market advanced sharply on Friday on the back of heavy buying across large-cap companies, especially IT and financials, as investors turn optimists of a strong June quarter (Q1FY27) show. The benchmark index- NSE Nifty 50 gained 1.09% to settle at 24,334, while the BSE Sensex advanced 1.25% to close at 78,151.
Global cues, however, remain a concern as Brent crude prices continue to trade above elevated (US$85.5/bbl) levels amid rising geopolitical tension in West Asia. The rupee also remains near a one-month low of Rs 96.3/US$.
"Although the investor sentiment remained cautious, Indian markets on Friday opened on a firm note, maintaining stability during the early trading session. The investors were cautious as the US continues its military strikes on Iran, keeping geopolitical uncertainty elevated," said R Ponmudi, CEO, Enrich Money, an online trading and wealth management firm.
On the sectoral front, Nifty IT and Private Banks emerged as the top-performing sectors on Friday. The broader market underperformed the benchmark indices, with the Nifty Midcap 100 index declining 0.41%, while the Nifty Small Cap 100 index fell 0.21%, reflecting selective profit booking in the broader market.
"There is a shift in market momentum, with strong traction moving toward large-cap stocks, led by the IT and banking sectors. This is supported by optimism around business updates and Q1 earnings expectations. The trend appears to be driven largely by domestic institutional investors rotating out of expensive mid- and small-cap stocks and into more attractively valued large caps that offer a better risk-reward profile,” said Vinod Nair, Head of Research, Geojit Investments Limited.
He added that the broader market remains constructive, with a combination of selective profit booking and buying, as the overall outlook for India continues to improve."
Among the large-cap stocks, Reliance Industries Ltd’s shares gained nearly 3% ahead of the Q1FY27 results. The surge is also attributed to promoters increasing their equity stake in the company during the April-June quarter. The promoter group holding rose by 48 basis points during the quarter to 50.48%.
ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank, Tata Consultancy Services, Infosys and Mahindra & Mahindra also gained significantly on Friday.
Siddhartha Khemka - Head of Research, Wealth Management, Motilal Oswal Financial Services said that Indian equities are expected to witness a gradual uptrend next week, on the back of a strong Q1FY27 earnings season so far, which is likely to remain the key driver of sectoral and stock-specific performance.
“With several index heavyweights reporting earnings over the weekend, investor focus will remain on management commentary and earnings reactions, which are expected to shape sectoral performance and define the near-term market narrative,” added Khemka. Results from HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank and Punjab National Bank, among others, over the weekend are expected to set the tone for the Financials sector.
(Arshad Khan in New Delhi contributed to the story)
