Why India’s Nifty 50 Is Holding Steady Despite Asian Market Selloff

India’s Nifty 50 traded in the green on Wednesday while Asia’s chip-heavy markets lost over 3%. Tax relief hopes, returning foreign money and low AI exposure are keeping it steady.

Foreign funds spent much of this year pulling money from India to chase AI gains in Korea and Taiwan.

The Selloff India Sidestepped

Asian stocks fell after early US midterm results raised fears of tougher scrutiny for AI, which hit chipmakers hardest.

The Nikkei 225 fell 4.05% from its previous close by midday. The KOSPI dropped 3.29%, and Taiwan’s TAIEX lost 3.11%.

India’s market has far less riding on AI hardware. The Nifty 50 dipped at the open, then rose to 23,850.35, up 0.17% from Tuesday’s close.

Consumer and financial stocks led the gains. The Nifty FMCG index rose 1.05%, and the Nifty Financial Services index added 0.50%.

Two other supports explain that resilience, starting with tax policy at home.

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Tax Hopes Give India’s Rebound a Home-Grown Catalyst

The Nifty rose 1.58% to 23,810.85 on Tuesday. Bloomberg said it was a fourth straight gain and a two-month high.

The rally followed Finance Minister Nirmala Sitharaman’s pledge to consider investor concerns over taxes on stock gains. India’s capital gains tax on listed shares runs at 12.5% for long-term holdings and 20% for short-term ones. She linked the debate to outflows by foreign institutional investors (FIIs).

“The situation is very different now. Circumstances have changed, challenges have grown, more FII outflows have happened,” Sitharaman said.

Those outflows have weighed on the market all year, but the flow picture has started to shift.

Foreign Money Is Coming Back

Global funds bought a net $2 billion of Indian stocks in the last two weeks of October, Bloomberg reported. That would reverse the rotation BeInCrypto tracked in May, when AI demand pulled capital toward Korea and Taiwan. 

US politics could add to the shift. Bloomberg noted that Democratic control of both chambers could soften US trade policy and weaken the dollar. A weaker dollar would support the rupee and draw more foreign money into Indian stocks.

What Could Test the Nifty’s Strength

Indian stocks now trail emerging-market peers by the widest margin in more than three decades, Bloomberg reported. Still, the early gains remain fragile.

Brent crude near $103 a barrel is another risk for India, a major oil importer. Sitharaman has also set no timeline for tax relief.

If the AI scrutiny trade deepens, India could keep drawing money that leaves Asia’s chip markets. A Republican hold on the Senate or a tax letdown would test that read.

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