- Indian IT stocks may start positively after US tech ADRs rose up to 6% on Monday
- Infosys and Wipro ADRs gained about 2%, Cognizant and Accenture surged around 4%
- Semiconductor stocks like Intel and Nvidia fell sharply, dropping as much as 8%
Indian IT stocks could see a positive start on Tuesday after American depositary receipts (ADRs) of several technology companies surged as much as 6% on Monday, even as semiconductor stocks came under heavy selling pressure on Wall Street.
Gift Nifty was also trading higher, up 0.40% at 23,538, signalling a mildly positive opening for Indian equities. ADRs of Infosys and Wipro gained around 2%, while Cognizant, ServiceNow and Accenture surged around 4%. Salesforce also witnessed a sharp rise, with technology stocks gaining despite a broader sell-off in the semiconductor space.
The moves could provide a positive cue for India's information technology pack, particularly after the sector has faced pressure from concerns over the potential disruption caused by artificial intelligence.
IT ADRs Rise Despite Semiconductor Sell-Off
The gains in IT ADRs came even as shares of several major semiconductor companies fell sharply during early US trade. SK Hynix, Nvidia, Intel, Micron, AMD and Sandisk were among the stocks in the red, with declines of as much as 8%.
Intel shares were trading around 8% lower after US markets opened.
The divergence between software and semiconductor stocks comes as investors reassess the pace and implications of AI development.
What Does It Mean For Indian IT?
Kranthi Bathini, Director - Equity Strategy at WealthMills Securities, said the move in US-listed IT stocks could be neutral-to-positive for Indian IT companies, although rising crude prices remain a significant risk for the broader domestic market.
“This is a neutral-to-positive for the Indian IT pack. But the surging crude prices are feared to weigh upon most sectors of the Indian market,” Bathini said.
He added that while the weakness on Wall Street was being driven by concerns over the pace of AI development, crude oil prices would be the key factor for Indian markets.
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“What's happening in Wall Street today is a direct impact of top AI company CEOs calling for slowing the pace of AI development. But for the Indian markets, the main determinant will be the prices of crude oil. If crude doesn't cool down, then it will be a huge negative,” he said.
AI Development Debate Weighs On Tech Stocks
The latest volatility in technology stocks follows calls from leading AI executives for a slower pace of AI development to allow safety protocols and regulatory frameworks to keep up with rapidly advancing technology. Anthropic CEO Dario Amodei and OpenAI CEO Sam Altman have backed greater caution around the development of increasingly powerful AI systems.
The comments have fuelled concerns among investors about the pace of AI spending and the potential implications for companies that are heavily exposed to the AI investment cycle. The impact has been particularly visible in semiconductor stocks, which have been among the biggest beneficiaries of the AI boom.
The debate has also spread to Washington, with US Senator Bernie Sanders urging US President Donald Trump and Chinese President Xi Jinping to pause the development of advanced artificial intelligence, including superintelligent AI.
Sanders, who has introduced legislation seeking to prohibit superintelligent AI, argued that stronger measures were required to contain the risks associated with the technology.
“When you are racing towards a cliff, you don't just ease up on the gas pedal. You hit the brakes,” Sanders said.
His comments add to growing political pressure around the development and deployment of increasingly capable AI systems.
Microsoft has also reportedly introduced guidelines aimed at placing restrictions on AI models. According to a CNBC interview with a Microsoft executive, the company has been working on the code of conduct for around five months and plans to establish limits for future AI models.
The development comes as major technology companies increasingly focus on establishing internal safeguards alongside the rapid expansion of AI capabilities.
Crude Oil Remains Key Risk For D-Street
For Indian equities, however, the reaction to global technology stocks could be overshadowed by movements in crude oil. Higher oil prices are particularly negative for India given its dependence on imports to meet a significant portion of its energy requirements. Sustained elevated crude prices can increase inflationary pressures, widen the trade deficit and put pressure on corporate margins.
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