Indian software services stocks are poised for their biggest jump in 17 months, as a slide in Asian chipmakers triggered a rotation into the so-called anti-artificial intelligence trade. The NSE Nifty IT Index rose as much as 4.9%, with HCL Technologies Ltd. and Tata Consultancy Services Ltd. leading the advance.
The rally followed a sharp fall in Korea's chip-heavy KOSPI Index, which dropped more than 5% after Broadcom Inc.'s chief executive likened the sentiment around AI investing to betting in a casino. Investors have increasingly turned to Indian IT shares whenever AI-linked stocks slump.
"Indian IT stocks now pick up whenever there is a slump in the AI trade," said Alan Richardson, a portfolio manager at Samsung Asset Management. But he cautioned that this alone is not enough. A sustained pickup in earnings and share prices is needed for foreign investors to return.
HCL Technologies rose as much as 8.1% to 1,321.55 rupees on Tuesday, supported by better-than-expected earnings for the quarter ended September. TCS also reported quarterly profit that topped analysts' estimates, as cost-cutting measures and a gradually improving contract flow helped drive growth at Asia's largest IT services provider.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing