Nifty IT Surges as Chip Trade Woes Hit Korea; Analysts Point to Resilience in Indian Markets
The tech stocks in India saw a strong rebound, rising up to 4% on July 13, contrasting sharply with turmoil in the South Korean stock market. Concerns over profitability and valuation have driven a significant selloff in major Korean chip manufacturers.South Korea's Tech Sector Faces Steep Correction Amid Overstretched Rally
The benchmark Kospi index experienced a severe downturn, plummeting by 9% as investor concerns intensified regarding the AI-driven stock rally in South Korea. SK Hynix Inc., one of the key industry players, tumbled by a record 15%.The sharp decline prompted a market-wide trading suspension. Peer Samsung Electronics Co. also saw significant losses, dropping nearly 11%. Foreign investors reportedly offloaded a considerable amount of shares. Exchange data indicates that foreign investment sold 1.7 trillion won ($1.1 billion) worth of Kospi shares on Monday, with selling concentrated in SK Hynix.
Chip Stock Valuations and Market Cap Reassessment
Both industry giants faced pressure regarding their valuations. Less than two months after achieving a $1 trillion market capitalization, SK Hynix closed the day at $875 billion. Samsung’s valuation also fell below this milestone mark. Both stocks are reported to be down by at least 30% from their peaks last month.Indian Market Resilience Boosted by FII Flows and Risk Diversification
Despite global tech nervousness, the performance of Nifty IT suggests increasing resilience in India. An analyst noted that the weakness seen in the chip trade within South Korea is proving to be a positive factor for the Indian market.VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, highlighted the importance of Foreign Institutional Investor (FII) inflows as a stabilizing force. FIIs acted as buyers on five of the last eight trading days.
The analyst explained that these flows are helping to reduce concentration risk within chip stocks, despite their attractive valuations. By moving capital into Indian markets, investors are favoring regions without concentrated risks and those with strong long-term growth prospects. If this trend persists, he suggests the Indian market will continue to remain resilient.
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