Indian equity markets experienced a significant upswing on Thursday, with both the BSE Sensex and NSE Nifty indices surging over 1%. The rally was primarily propelled by a shift towards 'reverse AI trade' in the technology sector, alongside key developments surrounding Reliance Industries Ltd's (RIL) Jio Platforms initial public offering (IPO), a recovering Indian rupee, and easing US bond yields.
IT Stocks Lead Gains Amid Reverse AI Trade
Domestic IT stocks, including industry giants Tata Consultancy Services Ltd (TCS), Tech Mahindra Ltd, and Infosys Ltd, were at the forefront of the market's gains. This surge indicates a growing momentum in what analysts are calling the 'reverse AI trade.'
The trend emerges from increasing investor concerns regarding the sustainability of AI-related spending by technology companies. These anxieties have been amplified by a higher-than-expected US inflation report, which saw the rate jump from 3.4% in August to 3.7% in September, fueling expectations of further monetary tightening by the US Federal Reserve.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted, "The hotter-than-expected US inflation print... has increased the possibility of yet another rate hike by the Fed in October. This concern triggered big selling in the US market, which led to a sharp correction of 1.88 per cent in the tech-heavy Nasdaq. AI stocks bore the brunt of the selling. The fear has spread to South Korea (Kospi) and Japan (Nikkei) impacting their markets in early trade today." This global sentiment shift has redirected investment interest towards non-AI-centric tech firms.
Jio Platforms IPO Set to Break Records
Adding to the market's positive sentiment, Reliance Industries Ltd (RIL) announced the price band for the much-anticipated initial public offering of its digital services subsidiary, Jio Platforms Ltd (JPL). The price band has been set between Rs 1,065 and Rs 1,119 per share.
At the upper end of this price band, the public issue is projected to raise Rs 30,213 crore, making it India's largest IPO by issue size. This offering is set to surpass the previous record held by Hyundai Motor India's Rs 27,870-crore offering in 2024 by Rs 2,343 crore. Other notable past IPOs include the National Stock Exchange of India's (NSE) Rs 22,562-crore issue in 2026 and Life Insurance Corporation of India's (LIC) Rs 20,557-crore offering in 2022.
Rupee Recovers, Bond Yields Ease
Further bolstering market confidence, the Indian rupee continued its recovery trajectory. This was attributed to recent foreign exchange measures implemented by the Reserve Bank of India (RBI) and reassuring comments from Governor Sanjay Malhotra, which reinforced expectations of ongoing currency support.
Internationally, the US 10-year Treasury yield also offered some relief to investors by easing to approximately 5.1 per cent, alleviating concerns over rising bond yields that can impact global investment flows.