Nifty Set for Pullback After Six Session Rally as Global AI Selloff Reaches India

Indian shares are expected to break a six session winning run on Friday, November 6, after a rout in global markets left investors weighing what the Democratic win in the United States could mean for AI regulation and foreign policy, Reuters reported.

GIFT Nifty futures stood at 24,460 at 7:49 a.m. IST, pointing to a weaker start for the Nifty 50, which closed at 24,536.6 on Thursday. The Hindu BusinessLine, in its pre-open note, put the expected gap down opening at about 170 points.

A rally that ran into a global rout

The pullback would follow the best session in seven months. The Nifty 50 rose 2.4 percent on Thursday and the BSE Sensex rose 2.6 percent, closing a sixth straight gain for both benchmarks. Brent crude fell below 100 dollars a barrel during that rally, and investors bet the Democratic sweep of the US midterm elections could speed an end to the US-Iran conflict.

Foreign institutional investors bought about 150 billion rupees of Indian stocks on Thursday, worth about 1.6 billion dollars. The Hindu BusinessLine put the exact figure at 14,974.68 crore rupees and called it their largest single day buying session in over six years. Reuters said the buying came as investors rotated out of AI linked trades around the world.

Why India may fall less

"The indicated decline is relatively contained compared with the severe global selloff, suggesting that lower crude and India's limited direct exposure to the AI-hardware trade are providing some insulation," said Hariselvan Radhakrishnan, founder and chief executive of HST Wealth, in comments reported by Reuters.

Two analysts told Reuters that domestic markets are likely to face a volatile session, with consolidation and profit booking possible after the winning streak. Ponmudi R, chief executive of Enrich Money, told The Hindu BusinessLine that the sharp correction in US technology stocks and the weakness across Asia could spill into domestic shares despite improving foreign fund flows and moderate crude prices, and that investors are likely to remain cautious.

The rout India is opening into

Sentiment turned risk averse overnight after a steep selloff in US technology stocks. The Nasdaq sank 5.5 percent, the S and P 500 slid 4.4 percent and the Dow Jones fell 3.4 percent, after weak Qualcomm results and concerns over slowing spending on AI infrastructure. Asian markets followed Wall Street lower on Friday, with South Korea's Kospi down 8 percent and Japan's Nikkei falling 5 percent, Reuters reported.

Some Indian linked shares held up overseas. The Hindu BusinessLine reported that Infosys American depositary receipts jumped 4.6 percent, Wipro ended flat, and the ADRs of HDFC Bank and ICICI Bank ended higher. It also reported WTI crude rebounding toward 91 dollars a barrel, a move that keeps India's energy import bill in focus.

Stocks in focus at the open

Reuters listed five results movers for Friday. Bharti Airtel missed second quarter profit estimates as higher network costs offset subscriber gains. Titan beat profit estimates, helped by a one time gain and demand for its diamond studded jewellery. Life Insurance Corp of India reported a rise in September quarter profit. ONGC posted a higher second quarter profit. Britannia beat September quarter profit estimates on steady demand for packaged foods.