loader2
Login Open ICICI 3-in-1 Account
  • Text Size
  • Text to Speech
  • Color Contrast
  • Pause Animations

Open ICICI
3-in-1 Account

Manage your Savings, Demat and Trading Account conveniently at one place

+91

BLOG

Global AI De-risking lead IT outperformance, Results Hits & Misses

ICICIdirect Research 23 Oct 2026 DISCLAIMER

Nifty pared last week’s gains, settling at 22,600, down 2.4%. The broader market suffered as the Nifty midcap and small cap indices plummeted by 6% and 7%, respectively. Notably, all major indices except for IT ended in the red, influenced by declines in sectors such as Metals, Defence, Realty, and FMCG.
With US 10-year Treasury yields climbing aggressively toward multi-year highs near 5.3% amid persistent inflation and Federal Reserve tightening risks, risk-free dollar yields became aggressively competitive. This triggered a massive reallocation out of emerging markets, forcing FIIs to aggressively de-risk and pull ~₹48k crores out of Indian equities in the first half of October. Heavy capital flight concentrated on broad domestic liquid heavyweights like Financial Services (-₹8.5k Cr) and consumer-facing cyclicals like FMCG (-₹8k Cr) and Automobiles (-₹6.5k Cr).  
Energy Shocks & Broad Sectoral Liquidation: Continued elevated energy prices intensified the FII selling expanded across rate-sensitive, industrial, and energy-linked segments, including Healthcare (-₹5,497 Cr), Capital Goods (-₹3,886 Cr), Telecommunication (-₹3,928 Cr), Oil & Gas (-₹3,680 Cr), and Metals & Mining (-₹3,693 Cr).  
Global AI De-risking Driving Indian IT Inflows: Amid concerns over stretched valuations and high capex gestations in global AI tech trades, FIIs pared back exposure in global AI plays and rotated capital into Indian Information Technology (IT) (+₹2,599 Cr).


What we expect:
Over the past 25 years, bull market corrections have typically arrested at around 17%, with approximately 16% already in place (since Jan-26 high of 26373), indicating maturity of price wise correction. Building portfolio during such scenario has been fruitful, garnering 15% returns in subsequent 3 months
With current 14% correction Midcap index is approaching near its key long-term rising trend line that coincides with price parity of 16% correction seen during early part of 2026. Thereby couple of percentage of correction cannot be ruled out
Currently, over 90% of stocks are trading below their 50-day EMA, and 75% are below their 200-day EMA, with a net advance-decline reading of 30, signalling capitulated extremes. Historically, such extreme reading (>80%) highlights bearish extremes scenario which have delivered a median rally of approximately 23% over the subsequent 6-12 months.

Download
ICICI Direct app

Invest, Track, and Manage your Portfolio Anytime, Anywhere

Download
ICICI Direct app

Invest, Track, and Manage your Portfolio Anytime, Anywhere