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GIFT Nifty points to strong start as Kospi chip rout trips circuit breaker
Foreign buying and Wall Street's midterm rally set Dalal Street up for a higher open on Thursday, but Seoul's chipmakers crashed on fears that a Democrat-led Congress will tighten rules on AI data centres.
Key points
- GIFT Nifty traded near 24,286, about 325 points above the Nifty's Wednesday close.
- Seoul triggered a sell-side circuit breaker at 10:16 am local time as the Kospi slid about 5%.
- Foreign investors bought ₹7,284 crore of Indian shares on Wednesday, a fourth day of buying.
Indian shares look set for a sixth straight day of gains on Thursday, even as a fresh rout in Asian chipmakers swept through Seoul on fears that the Democrats’ sweep of the US Congress will bring tougher rules for artificial intelligence.
GIFT Nifty futures were trading near 24,286 at 7:50 am IST, about 325 points above the Nifty’s close of 23,960.60 on Wednesday, pointing to a gap-up open at 9:15 am. The Sensex ended Wednesday at 77,301.40. Foreign investors bought shares worth ₹7,284 crore on Wednesday, their fourth day of buying in a row, while domestic funds sold ₹3,712 crore.
Seoul’s sell-off
The mood in Korea was very different. The Kospi opened about 2% lower and the fall gathered pace as programme selling cascaded through large chip stocks. At 10:16 am in Seoul, 6:46 am IST, the exchange triggered a sell-side circuit breaker, suspending programme sell orders, with Kospi 200 futures down 5.25%. The index slid to the 5,400 level, about 5% down.
Samsung Electronics fell about 6% and SK Hynix about 9%. Investors fear that a Democrat-led Congress will tighten rules on AI data centres, hurting demand for memory chips. Overnight the Philadelphia chip index dropped 3.1% to a six-month low, even as the Dow jumped 3% to 53,356.12 on Wednesday.
“Major futures indices including the S&P 500 and Nasdaq 100 turned lower after early counting showed Democrats leading,” Kim Seok-hwan, a researcher at Mirae Asset Securities, said of Wednesday’s swing in Seoul. Tokyo’s Nikkei 225 was slightly lower in early trade.
What it means for India
Dalal Street has had less to fear from the AI trade than Seoul or Taipei, and cheaper oil has helped it more. Brent was near $97 a barrel, down sharply over five sessions, which eases the import bill for India. Traders will watch whether the Nifty can hold above the 24,000 mark once trading opens.