AI Sell-Off Jolts Asian Markets as Indian Stocks Extend Rally

November 6, 2026

Curated by Gurdeep Singh, Amritsar, Punjab
Updated: Friday, 6 November 2026 at 10:30 AM IST

Asian markets opened Friday sharply lower after a broad technology sell-off on Wall Street, with investors questioning whether the enormous sums being committed to artificial intelligence will generate returns quickly enough. Indian shares had surged in the previous session, buoyed by softer oil prices and renewed foreign buying. The contrast captures a market caught between confidence in India’s domestic demand and caution about the global technology cycle.

AI spending becomes a market test

Japan’s Nikkei fell more than 6% after the open, while South Korea’s Kospi dropped 7.4% in morning trading. Samsung Electronics lost 7.9%. The declines followed a 4.4% fall in the S&P 500 on Thursday; the Nasdaq was nearly 12% below its recent record.

The sell-off reflects a shift in investors’ questions. The promise of AI has helped drive demand for advanced chips, data centres and the power needed to run them. Now, markets are looking for evidence that this investment can translate into revenue and profit at a pace that justifies the cost. If companies slow or postpone data-centre projects, the impact could spread from chipmakers to construction firms, equipment suppliers and energy providers.

That does not mean the AI build-out has stopped. It does mean that investors are paying closer attention to spending plans, financing needs and returns. Technology shares can move sharply when expectations change, and the effect can reach markets far beyond the companies directly involved.

India’s rally gets support from cheaper oil and foreign buying

India’s market moved higher on Thursday. The Sensex gained 2.60% to close at 79,310.01, while the Nifty rose 2.40% to 24,536.60. Brent crude slipped below $100 a barrel, easing one pressure point for a large oil-importing economy. Foreign portfolio investors were also reported to have invested about ₹55,000 crore in Indian equities over 14 trading sessions.

The fresh inflows mark a change after months of foreign selling and helped lift sentiment across shares, including financial and auto companies. But one strong session and a short spell of buying do not settle the longer-term picture. A renewed rise in crude or another global flight from risk could quickly test the rally.

Services are expanding, though not every signal is strong

India’s services activity improved in October, with the purchasing managers’ index rising to 55.8, a four-month high. Readings above 50 indicate expansion, and the latest result points to continued growth as demand and new business improved.

The survey also showed a slower pace of hiring and export growth. New export orders expanded at their weakest pace since February 2023. That leaves a mixed picture: domestic demand is supporting service businesses, while firms exposed to overseas customers face a less favourable environment. The headline index is encouraging, but the underlying figures suggest the recovery is not uniform.

A small share of factories produces most of the output

India’s manufacturing numbers highlight a different kind of unevenness. In FY25, factories with annual output above ₹500 crore made up about 3.6% of operating units but generated 62.07% of total manufacturing output and nearly 61% of net value added. They employed roughly 31% of the sector’s workforce.

By comparison, factories producing up to ₹10 crore a year accounted for 52.36% of operating units but contributed just 1.92% of output and 2.12% of net value added. These figures show the scale advantage of the largest plants. They also point to the challenge of helping smaller manufacturers gain access to technology, finance, infrastructure and customers so they can expand production and create more jobs.

The survey does not make small factories unimportant: they account for many operating units and jobs. But their small share of output raises a practical question for India’s industrial strategy: how can more firms move from operating at a small scale to investing, hiring and supplying larger markets?

What to watch next

For Indian businesses and investors, the next signals are whether foreign inflows continue, oil remains below $100, and services demand translates into sustained orders and hiring. Globally, attention will stay on technology-company spending plans and signs that AI investment is producing durable revenue. The current data offer reasons for optimism about India’s near-term activity, while the market swings and factory figures show how exposed and uneven that growth can be.