Global Equities Scale Record Highs Amid AI Optimism, but Indian Market Remains Under Pressure

Global Markets Scale Fresh Record Highs Amid AI-Linked Rally

Despite ongoing geopolitical tensions in West Asia and elevated crude oil prices weighing on domestic equities, global markets have reached new heights in recent weeks. A renewed rally in AI-linked stocks and resilient corporate earnings have fueled a surge in technology stocks globally, while better-than-expected first-quarter earnings have boosted investor confidence in the sector.

The rebound in the AI trade has led to a rally in technology stocks across the globe, with stocks in the AI ecosystem emerging as hot picks. Reports indicate growing interest from overseas investors in the sector, further driving the rally. Key Asian markets have seen significant gains, with South Korea's benchmark KOSPI index surging to a record closing high above 8,200 in today's trade, representing a gain of over 90% so far in 2026.

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The tech-heavy US Nasdaq has rallied 15% over the last five months, with gains largely powered by chip stocks such as Nvidia. In contrast, Indian equities remain relatively low on AI investment opportunities and continue to grapple with weak annual earnings growth. As a result, they have emerged among the worst-performing major global markets this year, with the Nifty 50 and BSE Sensex down nearly 9% and 11%, respectively.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, notes that the ongoing bull rally in global markets continues to show strong momentum, with the S&P 500, Nasdaq, and Nikkei scaling new record highs. However, he warns that Indian markets are likely to remain under pressure due to continued FII selling as long as this trend persists.

Domestic earnings have largely come in better than expected, with midcaps outperforming largecaps. Profit growth has outpaced revenue growth, though sluggish revenue expansion reflects weak demand conditions in the economy. Financial stocks offer good prospects due to their fairly valued nature, while pharmaceutical companies continue to show resilience due to inelastic demand and strong export performance.

Global sentiment remains fragile as geopolitical tensions in West Asia continue to influence investor risk appetite. Hariprasad K, Sebi-registered Research Analyst and Founder of Livelong Wealth, notes that fresh US military strikes in southern Iran have weakened hopes of an immediate diplomatic resolution, reviving concerns over energy supply disruptions. Elevated crude oil prices continue to keep pressure on the Indian rupee, which remains vulnerable near historically weak levels against the US dollar.

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Sectors with high fuel sensitivity, including automobiles, paints, aviation, logistics, and consumer-facing businesses, may continue to witness cautious investor positioning amid rising cost pressures.