TCS, TechM, Infosys shares lead Sensex, Nifty gainers on reverse AI trade; here's why

IT stocks Tata Consultancy Services Ltd (TCS), Tech Mahindra Ltd and Infosys Ltd led the gainers on Thursday, as the NSE Nifty and the BSE Sensex rose over half a per cent amid a global selloff. Domestic IT stocks gained as the reverse AI trade gathered pace following a higher-than-expected US inflation print, which raised doubts over AI-related commitments by technology giants amid rising bets on Fed rate hikes.

Tech Mahindra Ltd jumped 2.41 per cent to Rs 1,614 and was the top Sensex gainer. It was followed by TCS and Infosys, which gained 2.24 per cent and 1.85 per cent, respectively.

Sensex rose 467 points or 0.65 per cent to 73,249.70. Nifty was quoting 123 points or 0.54 per cent higher at 22,745.70.

US Core CPI inflation surprised to the upside, accelerating to 0.33 per cent month-on-month (MoM) in September from 0.29 per cent in August. Nomura said the unexpected strength in owners equivalent rent and certain goods components.

"Moreover, components with high exposure to semiconductors (computers and possibly toys) rose in September, suggesting inflationary pressures induced by the ongoing AI buildout. If our forecast materialises, a 0.3 per cent MoM core PCE inflation should keep October FOMC a live meeting," Nomura said.

Among other iT stocks, LTM, Coforge, Persistent Systems, Mphasis and HCL Technologies added up to 1.6 per cent.

From the Indian market perspective, the correction in AI stocks is a positive, said V K Vijayakumar, Chief Investment Strategist at Geojit Investments.

FIIs who have been selling Indian stocks and buying AI stocks will halt this trend and under favourable conditions might even reverse it, Vijayakumar said.

"Indications that the finance ministry might reconsider the taxation of LTCGs in the coming Budget, have the potential to keep the market resilient. The strength in the IT stocks following the results of HCLT and the optimism surrounding that will hold the IT index strong. The expected good Q2 results from financials can impart resilience to the market," Vijayakumar said.