Sensex, Nifty surge 1% each; reverse AI trade, Jio IPO, rupee in spotlight

Indian equity benchmarks saw a sharp uptick in Thursday's trade, with domestic IT stocks leading the gains amid renewed interest in the reverse AI trade. Investors also tracked Reliance Industries Ltd's (RIL's) announcement of the price band for the upcoming Jio Platforms initial public offering (IPO), the rupee's recovery and movements in US bond yields.

Last checked, the 30-share BSE Sensex pack was trading at 73,793.71, up 1,011.82 points or 1.39 per cent, while the NSE Nifty index surged 294.60 points or 1.30 per cent to 22,917.30 level.

Reverse AI trade

IT stocks, including Tata Consultancy Services Ltd (TCS), Tech Mahindra Ltd and Infosys Ltd, led the gains as the reverse AI trade gathered pace. The trend follows concerns over AI-related spending by technology companies amid a higher-than-expected US inflation print and rising expectations of further monetary tightening by the US Federal Reserve.

"The hotter-than-expected US inflation print, which spiked from 3.4 per cent in August to 3.7 per cent in September, 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," said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

Jio Platforms IPO

RIL on Wednesday announced a price band of Rs 1,065 to Rs 1,119 per share for the IPO of its digital services subsidiary, Jio Platforms Ltd (JPL).

At the upper end of the price band, the Rs 30,213-crore public issue is set to become India's largest IPO by issue size, surpassing Hyundai Motor India's Rs 27,870-crore offering in 2024.

Other major IPOs include the National Stock Exchange of India's (NSE's) Rs 22,562-crore issue in 2026, Life Insurance Corporation of India's (LIC's) Rs 20,557-crore offering in 2022, One 97 Communications (Paytm) at Rs 18,300 crore in 2021, and Tata Capital at Rs 15,512 crore in 2025.

Jio Platforms' proposed issue would exceed Hyundai Motor India's record by Rs 2,343 crore, based on the upper end of the price band.

Rupee recovery

The Indian rupee continued to recover as the Reserve Bank of India's (RBI's) recent forex measures and Governor Sanjay Malhotra's comments reinforced expectations of further support for the currency, dealers said.

US 10-year bond yield

The US 10-year Treasury yield eased to around 5.1 per cent, offering some relief from rising bond yields.