As AI stocks slumped, India had its best week since 2021

What happened

India's main share indices had their best week in more than five years. The Nifty 50 rose 8.6% in the week to Friday 6 November, closing at 25,030, and the Sensex gained 8.8%, the largest weekly rises since February 2021. Both indices rose for seven sessions in a row and closed at eight-month highs. Foreign investors bought about 150 billion rupees ($1.6 billion) of Indian shares on Thursday, their biggest single-day purchase in nearly six years.

It came in the same week that chip-heavy markets were hit hardest by the AI sell-off: South Korea's Kospi and Japan's Nikkei each fell about 6% on 6 November. A Hong Kong index of mainland Chinese companies rose 5.2% on the week, its best since March 2025, Bloomberg reported.

Why India gained

Two mechanisms worked in India's favour. First, oil. India imports most of its oil, so a high oil price works like a tax on its economy, widening the trade deficit and pushing up inflation. Brent fell about 12% on the week on hopes of a US–Iran deal, which eased that pressure. Second, exposure. India's market has few of the chipmakers and AI infrastructure firms that drove other markets this year, which made it an underperformer until October and a refuge this week. Even Indian IT services companies are seen as less exposed to capital-hungry AI spending.

Diversification in action

When many investors crowd into one theme, the markets that missed out become cheap by comparison. When the theme unwinds, money looks for exactly those places. Fund managers quoted by Bloomberg pointed to India, Vietnam, Chinese technology firms and domestically focused consumer companies in Korea as beneficiaries. The move is a reminder of why spreading investments across regions and sectors reduces risk: what falls hardest in one shock is often what rose most before it.

The rebound has a limit so far. The Nifty and the Sensex are still down 4.2% and 4.9% in 2026, while the MSCI Emerging Markets index is up 7%.

Where it sits in the chain

This is Link 4, financial markets. Oil, an external shock, matters too: for importers like India, a lower price is a gain in real income.

What to watch

• India's October inflation figure this week, expected to be higher after the oil shock.
• Whether foreign buying continues, and the rupee.
• Oil prices, if US–Iran talks progress or stall.