Global Stock Market Trends Amid West Asia Crisis
The West Asia crisis has had a significant impact on global stock markets. However, recently, many have rebounded, with indices in the US seeing a 1-8% increase above pre-war levels. The Nasdaq Composite even reached a record high. Similarly, South Korea’s Kospi and Japan’s Nikkei 225 have recovered, showing a 2-4% increase despite initial declines.
India's Stock Market Performance
Contrarily, India's stock market has not performed as well. The Nifty and Sensex are still down by 5-6% from February 27, although they had previously fallen by as much as 11%.
Factors Influencing Market Performance
Artificial Intelligence (AI) Investment
- India’s limited investment in AI is a major factor why its stocks underperformed.
- Countries like the US, Japan, and South Korea have benefitted from significant AI-related investments, fueling their market growth.
Foreign Investor Behavior
- Foreign investors have been selling Indian shares due to the country's lack of AI investment and energy import dependency.
- India experienced a foreign portfolio investor (FPI) sell-off of $12.7 billion in March and $4.7 billion in April.
Impact on Indian Rupee
The Indian rupee has been adversely affected, weakening to 94.26 per dollar, down by 4.6% in 2026, despite intervention by the Reserve Bank of India.
Foreign Investment in Other Markets
- Foreign investors have significantly invested in Japanese, US, and South Korean markets.
- The US benefits from its status as a safe haven and lower energy dependency, while South Korea benefits from AI-related trades.
Structural Market Differences
Technological Stock Weightage
- AI and tech stocks have higher weightage in outperforming indices compared to India's Nifty.
- For example, Samsung Electronics and SK Hynix account for over 40% of the Kospi, while tech entities make up about 70% of the Nasdaq.
- In contrast, IT services only hold a 10% weight in the Nifty, with the Nifty IT sector declining by 25% in 2026 due to AI-induced profit concerns.
