India's software services names ripped higher, with the Nifty IT Index up 5.2% for its best day since May 2025. HCL Technologies and Tata Consultancy Services did the heavy lifting, and HCL's 8.4% jump marked its largest one-day rise since 2020 on the back of an earnings beat for the quarter ended September. The tech surge helped India's benchmark indexes add more than 1.5%, topping every other major market in Asia.
Chip stocks across Asia stumbled, and investors looked for the other side of the AI trade. Korea's chip-weighted KOSPI fell more than 5% after Broadcom's chief executive likened the mood around AI bets to a casino. After months of pressure on Indian software shares as investors worried the industry might be upended by the rapid uptake of generative AI, stretched AI valuations and the failure of a $5 billion IPO from an Australian data center company led traders to reassess the sector.
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"Indian IT stocks now pick up whenever there is a slump in the AI trade," said Alan Richardson, portfolio manager at Samsung Asset Management. He added that this pattern alone will not bring foreign investors back, saying there needs to be a sustained improvement in earnings and share prices. Traditional IT providers are still feeling earnings strain as AI tools gain ground in areas they once dominated. On a recent call with analysts, TCS said the demand environment has not "materially changed," and added that initiatives lacking near-term value continue to face scrutiny.
Today's pop looks more like a reaction to shifting AI sentiment than a clean bill of health for fundamentals. HCL's print helps the mood, but management commentary still points to a slow backdrop and careful project selection. If you see more bursts like this, it likely reflects where the AI hype cycle sits and how stretched valuations feel, not a sudden return to boom-time demand.
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