Indian equities bounced back on Friday, with the recovery driven predominantly by a surge in technology stocks. Investors showed renewed interest in undervalued IT shares, a shift aided by a decline in crude oil prices. Cheaper crude is a supportive variable for India, which imports the bulk of its oil, as it eases pressure on import costs and inflation.

Foreign investors also reversed a prolonged period of selling, turning net buyers in July and August. The broader market benefited from this trend as well, with mid- and small-cap stocks appreciating alongside the benchmark indices. Indian IT services companies, which earn most of their revenue in US dollars from overseas clients, have historically been sensitive to shifts in foreign investor sentiment and to signals about global demand for technology spending.

The renewed demand for IT shares and the return of foreign portfolio inflows placed the technology sector and FPI activity at the center of market attention on Dalal Street. Market participants typically track FPI flows closely because they are a significant component of trading activity in Indian equities, and sustained inflows or outflows often coincide with broader index movements.

Source: Economic Times Markets