IT Stocks Retreat After Five-Day Rally As AI Trade Volatility Hits Asian Markets

Indian IT stocks witnessed profit booking on July 31 after a strong five-session rally, with the sector coming under pressure due to volatility in the global artificial intelligence trade.

The IT index declined 2.5%, although it remained on track for its biggest monthly gain in six years, having risen around 16% in July.

The decline followed a reversal in sentiment across some Asian technology markets. India’s IT sector is considered relatively less exposed to global AI-driven movements due to the limited presence of pure-play artificial intelligence companies in the domestic market.

Major IT companies including Infosys and Tata Consultancy Services dragged the sector lower, with both stocks falling nearly 3%. Persistent Systems, Wipro and LTM were among the other notable losers in the sectoral index.

The broader technology rally globally was supported by Microsoft’s strong earnings outlook, which helped revive investor confidence in technology stocks. Microsoft shares jumped more than 15% on Wall Street after the company issued an optimistic forecast.

Asian markets also recorded significant gains as investors increased exposure to semiconductor companies following strong earnings from major technology firms. The MSCI Asia Pacific Index rose as much as 4.3%, marking its second consecutive week of gains despite recent market fluctuations.

South Korea’s Kospi led regional gains, surging as much as 17%, driven by major chipmakers Samsung Electronics and SK Hynix. Taiwanese stocks also advanced more than 7% amid renewed optimism over artificial intelligence demand.

The rally followed strong performances from global technology firms such as Amazon and Microsoft, whose earnings and increased AI infrastructure spending boosted expectations for continued growth in the sector. The Philadelphia Semiconductor Index also recorded its biggest gain in more than a year.

Analysts said foreign institutional investors are seeking stability amid extreme volatility in global technology markets.