The Nifty IT index snapped a two-day losing streak, surging 2.5 percent on January 29 as global tech stocks staged a comeback. A dramatic rebound in Nvidia and AI-linked shares lifted the Nasdaq by 2 percent overnight, with Nvidia alone clawing back 9 percent after its historic $593 billion single-session wipeout. Apple also jumped nearly 4 percent as investors braced for earnings from Big Tech heavyweights this week.
Technology stocks led gains in Asia-Pacific as well today, tracking advances on Wall Street as investor angst ebbed over the emergence of a low-cost Chinese AI model, DeepSeek, that some see rivalling U.S. dominance of the industry.
By 2:25 PM, the Nifty IT index held strong, with all 10 components up 1-5 percent, led by Infosys, TCS, and Persistent Systems. This comes after a sluggish January, with the index down over 1 percent after positive returns in November and December.
The shakeup began when Chinese AI startup DeepSeek disrupted the market with its low-cost AI assistant, rattling the assumption of sustained high demand for advanced AI chips. Surpassing ChatGPT as the top free app on Apple's U.S. store, DeepSeek’s model—built on cheaper chips and smaller datasets—sent shockwaves across the AI supply chain. Nvidia bore the brunt of this disruption, plunging 17 percent in a single session, dragging down the Nasdaq to its worst one-day loss in over a month.
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Back in India, the AI tremors were also felt. Electronics Manufacturing Services (EMS) stocks like Dixon Technologies, Kaynes Technology, Netweb Technologies, and MIC Electronics tumbled on January 28. Kaynes Tech led the rout, crashing 20 percent, also pressured by a downward revision in its FY25 revenue guidance. Netweb Technologies was locked in a 10 percent lower circuit, hit by a lock-in expiry, while Dixon Tech and MIC Electronics shed 5 percent each.
Anant Raj, a key player in data-center infrastructure, nosedived 20 percent on November 28 amid fears of declining AI hardware demand. Nomura warns that tech giants like Microsoft and Meta may now face mounting pressure to justify their massive AI investments in the wake of cost-efficient AI alternatives.
Also Read | Deepseek Impact on AI Stocks: Dixon Tech, Kaynes Tech, Netweb shares crash up to 20%
While IT stocks rebounded today, market experts remain cautious. Analysts believe that IT's strong performance in tech stocks today is likely just a bounce after a sharp sell-off globally. "The news that caused the sell-off is still present, and the structural changes in the industry, particularly around valuations, will continue to impact the sector. It's too early to get overly optimistic about IT stocks," said Rohit Srivastava, Market Strategist & Founder of Indiacharts.
Arindam Mandal of Marcellus Investment Managers questions whether the data-center boom can sustain itself beyond 2026, while Devarsh Vakil of HDFC Securities calls it a "paradigm shift" in AI development. DeepSeek's rise challenges the dominance of trillion-dollar tech giants, proving that groundbreaking AI need not demand astronomical spending.
Market experts, however, noted that for Indian IT firms, this could lower barriers to entry, opening up new opportunities. Easier AI adoption could significantly accelerate investments in data centers—a critical need for India, which accounts for 22-24 percent of global data consumption but stores only 2-3 percent of it domestically.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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