If you’ve been tracking global markets this week, you’ve probably noticed one thing. That Asian equities are bleeding.
From South Korea to Japan, investors have been rushing for the exit as technology and artificial intelligence (AI) rally lost steam.
, Hong Kong’s Hang Seng has slipped 1.76%, while China’s CSI 300 has dropped 3%, on Friday. The sharp correction has wiped billions off market value as investors rushed to exit technology and artificial intelligence (AI)-linked stocks amid fears that valuations had become stretched.
Now, all eyes are on India.
With owing to the Muharram holiday on Friday, Indian investors watched the global market rout unfold from the sidelines. As trading resumes on Monday, the key question is whether the Sensex and Nifty will mirror the sharp selloff seen across Asian markets or whether strong domestic fundamentals will cushion the blow.
The latest selloff has been driven largely by concerns that the AI-fuelled rally, particularly in semiconductor stocks, had become too expensive.
South Korea has borne the biggest hit because companies such as Samsung Electronics and account for a large share of its benchmark index. Japan has also seen heavy selling in technology shares, while weakness spread to Hong Kong and mainland Chinese markets as investors rushed to lock in profits after months of strong gains.
The sharp decline came despite upbeat earnings from Micron Technology, whose strong results had briefly lifted hopes for continued AI demand. Instead, investors chose to focus on stretched valuations and rising concerns that the AI trade had run ahead of fundamentals.
According to Shashank Udupa, Sebi-registered research analyst, a negative opening appears likely, but investors should not immediately expect a market crash.
“A gap-down open looks likely. The part I’d question is ‘sharply lower’. GIFT Nifty is down only about a quarter of a percent, nowhere near the 4% to 6% damage seen in Korea and Japan,” he said.
Udupa points out that South Korea’s market is heavily concentrated in semiconductor giants like Samsung and SK Hynix, which had witnessed extraordinary rallies before the correction.
“The Indian market is much more diversified. I’d expect a soft red open and a choppy first hour rather than a crash,” he added.
Indian investors have had to sit through the global market turmoil without being able to react, as trading remains suspended until Monday.
Udupa said the long weekend could amplify negative sentiment initially, but may also allow markets to settle before trading resumes.
“The three-day closure can amplify the opening reaction, but I believe the market should recover. India has already corrected significantly and we haven’t fully recovered yet. Also, we are not in the kind of AI bubble seen in some global markets, and that could actually work in our favour,” he says.
Gaurav Garg of Lemonn Markets Desk shares a similar view. “A gap-down is likely, but ‘sharp’ looks like the wrong word based on the evidence so far. GIFT Nifty was down only around 0.3% even as Seoul and Tokyo were in freefall. That points to a moderate negative opening rather than a crash,” he said.
According to Garg, the weekend could actually help absorb some of the panic.
“A three-day gap forces Monday to absorb everything at once, but it also gives margin calls, positioning and trading algorithms time to cool rather than compound the panic. Investors should watch the first 60 to 90 minutes of trade rather than the opening gap itself,” he added.
Although Indian markets generally move in line with global sentiment during major shocks, experts believe India’s market structure is very different from that of North Asia.
“On day-one shocks we move with Asia. India doesn’t open green when the region is bleeding,” said Udupa.
“But India’s economy is driven by domestic consumption and financials rather than semiconductors or AI capital expenditure. Domestic institutional investors and SIP inflows have consistently absorbed foreign selling, allowing India to recover faster than many export-driven Asian markets.”
Garg also believes domestic flows remain India’s biggest strength. “Global sentiment determines how the market opens, but domestic money increasingly decides where it closes,” he said.
He pointed out that domestic institutional investors (DIIs) have continued buying aggressively even as foreign investors have been selling, helping cushion market declines over recent months.
However, IT stocks could remain under pressure on Monday, although experts say the reasons differ from those driving the selloff in Korea and Japan.
Udupa noted that much of the pessimism around Indian IT is already reflected in stock prices.
“After Accenture cut its guidance, Nifty IT fell around 6% to a three-year low. Infosys is near five-year lows, TCS is around multi-year lows and valuations have already become much cheaper. The bigger risk isn’t Monday’s selloff; it’s whether AI continues to pressure growth and margins over the next few years,” he said.
Garg agreed. “Indian IT carries no AI premium left to surrender. Nifty IT is already down sharply this year and trades below its long-term valuation average. It may fall with global sentiment, but it isn’t facing the same AI bubble that North Asian technology stocks are now unwinding,” he explains.
According to Udupa, companies closely linked to the global AI supply chain could remain vulnerable if the correction deepens.
He points to stocks supplying equipment or components to global AI-related businesses, saying many of them are trading at stretched valuations and could see further pressure if the AI trade continues to unwind.
Garg, however, expects banks and consumption-focused companies to provide relative stability, while high-beta sectors such as capital goods, defence and metals may experience greater volatility.
For now, experts believe investors should prepare for volatility rather than assume the beginning of a prolonged bear market.
“This looks like a valuation reset in the world’s most expensive AI trades rather than the start of a fundamental downturn for India. Expect a jittery, gap-down Monday and a volatile trading session, but India’s domestic flows and consumption-driven economy should help limit the damage compared with other Asian markets,” Udupa said.
In other words, Monday could begin on a nervous note, but whether it turns into a bloodbath will depend on global cues over the weekend, GIFT Nifty’s movement before the opening bell, foreign investor activity and, above all, whether domestic institutional investors once again step in to steady the market.