South Korea's Kospi Logs Record 18% Single-Day Jump As AI Rally Returns, Indian IT Stocks Take A Dip

South Korea's benchmark Kospi index staged its biggest-ever single-day rally on July 31, jumping 17.91 per cent to close at 6,595.45 as investors piled back into artificial intelligence (AI)-linked technology stocks after Microsoft delivered a strong earnings surprise. The index gained 1,001.89 points during the session, eclipsing its previous record daily rise of nearly 12 per cent recorded during the 2008 global financial crisis. The rally came just days after the Kospi had slipped more than 17 per cent amid concerns that AI valuations had run ahead of fundamentals and that rising competition from Chinese chipmakers could dent future earnings.

The turnaround gathered pace after Microsoft reported better-than-expected quarterly results and reaffirmed its aggressive AI spending plans, easing fears that the billions being invested in AI infrastructure may not generate adequate returns. The company's shares surged 15.5 per cent overnight, their strongest single-day gain in nearly 18 years, while the Philadelphia Semiconductor Index jumped more than 8 per cent.

The positive sentiment spread quickly across Asian markets, with Japan's Nikkei 225 rising 4 per cent and Taiwan's Taiex advancing 8 per cent, led by gains in semiconductor and technology stocks.

Foreign institutional investors powered the rally in Seoul, buying a net 7.25 trillion won worth of Kospi shares. Institutional investors also turned net buyers after initially selling in early trade. A buy-side sidecar was triggered minutes after the market opened as program buying accelerated.

Semiconductor stocks accounted for much of the gains. Samsung Electronics jumped 26.81 per cent, while memory chipmaker SK Hynix hit its daily upper circuit after skyrocketing 29.95 per cent. Other heavyweight stocks, including Samsung C&T, Samsung Life Insurance and Hyundai Motor, also posted double-digit gains. The Korean won strengthened against the US dollar as risk appetite returned to the market. The Korean currency ended the session at 1,424 against the US dollar, strengthening by 13.4 won from the previous close.

The global optimism, however, turned negative for Indian IT stocks, which continue to grapple with slower discretionary technology spending and delayed client decision-making.

Most Nifty IT stocks ended lower on the last trading session of July. Tata Consultancy Services was the biggest loser, falling 2.71 per cent, followed by Infosys, which declined 2.18 per cent. LTIMindtree slipped 1.71 per cent, Coforge fell 1.43 per cent and Wipro lost 1.38 per cent. Tech Mahindra dropped 0.90 per cent, while Mphasis and HCLTech ended lower by 0.71 per cent and 0.52 per cent, respectively. The only gainers in the pack were Oracle Financial Services Software (OFSS), which rose 0.57 per cent, and Persistent Systems, which gained 0.35 per cent.

Global markets are rewarding companies directly linked to the AI hardware ecosystem, particularly chipmakers expected to benefit from higher spending on data centres and computing infrastructure. Indian IT firms, on the other hand, are still waiting for a broader recovery in client spending on technology projects.