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South Korea’s Kospi plunged over 8, Japan’s Nikkei slumped 6% and Taiwan’s Taiex tumbled as fears of tighter AI scrutiny and a slowdown in data centre investments triggered a global technology sell-off. Indian equities, however, extended their winning streak, supported by falling crude oil prices, improving earnings and a shift in foreign investor sentiment.
The Indian stock market staged a powerful rally on Friday (November 6), with the BSE Sensex jumping 1,718 points, or 2.17 per cent, to cross the 81,000 mark and settle at 81,028.02.
The rally came even as global markets faced a massive technology-led sell-off following concerns over artificial intelligence (AI) investments and the outcome of the US midterm elections. South Korea’s Kospi plunged more than 8 per cent, while Japan’s Nikkei and Taiwan’s Taiex also suffered steep losses.
So, what is driving the Indian market’s gains? Five factors explain the rally.
US midterm results
The outcome of the US midterm elections has emerged as an important trigger for investor sentiment.
Democratic gains have raised expectations that political gridlock in Washington could limit the scope for abrupt policy decisions, including those related to tariffs and geopolitical conflicts.
Investors are also hopeful that the election outcome could improve prospects for de-escalation in the Iran-US conflict, reducing uncertainty around global energy supplies.
These expectations have helped improve sentiment towards emerging markets, including India.
Crude oil prices fall
The sharp decline in international crude oil prices has been one of the biggest positives for Indian equities.
More from BusinessBrent crude futures fell more than 8 per cent in the previous session, slipping below $95 per barrel amid expectations of an improvement in global supply conditions and easing geopolitical tensions.
As one of the world’s largest crude oil importers, India stands to benefit from cheaper energy.
Lower oil prices can reduce the import bill, ease inflationary pressures, support the rupee and improve the country’s current account balance.
Kotak Institutional Equities has also highlighted the potential for lower crude prices to strengthen India’s macroeconomic outlook in the coming months.
Foreign investors pump nearly Rs 15,000 cr into equities
Foreign institutional investor (FII) buying has provided another major boost to Dalal Street.
Foreign investors bought Indian equities worth approximately ₹14,975 crore on November 5, marking their biggest single-day net purchase since September 2024, according to provisional exchange data.
The return of foreign capital comes after a prolonged period of selling pressure in Indian equities.
Cheaper crude, improving earnings expectations and softer global bond yields have made Indian stocks more attractive to overseas investors.
Strong corporate earnings improve market sentiment
The improving earnings outlook has also supported the market recovery.
Nifty 50 companies reported a 19 per cent year-on-year increase in net profits during Q2FY27, according to Kotak Institutional Equities.
The brokerage expects Nifty 50 net profits to grow 20 per cent in FY27 and FY28.
Stronger earnings provide fundamental support to stock valuations and help investors look beyond short-term global volatility.
Global AI sell-off triggers a shift in investment sentiment
The latest AI-led market rout has also highlighted the difference between India’s market composition and technology-heavy Asian indices.
South Korea, Taiwan and Japan have significant exposure to semiconductor manufacturing and AI infrastructure supply chains. Consequently, concerns about slower data centre expansion have triggered heavy selling in their technology stocks.
India, meanwhile, has relatively lower direct exposure to the global semiconductor manufacturing cycle. Its equity market is supported by banking, financial services, automobiles, consumption and other domestic-orientated sectors.
This has helped Indian equities remain relatively resilient despite the global technology sell-off.
What lies ahead?
The latest rally reflects improving investor confidence in India’s economic outlook, supported by lower crude prices, foreign capital inflows and stronger corporate earnings.
However, sustaining the gains will depend on whether oil prices remain under control, geopolitical tensions ease and foreign investors continue buying Indian equities.
For now, Dalal Street is drawing support from a combination of global developments and domestic fundamentals, even as international technology markets face mounting uncertainty.
