Indian technology and power infrastructure stocks dropped up to 6% on October 15. The selloff was triggered by rising US inflation data and concerns that high interest rates will pressure the profitability of companies tied to AI and data center expansion.
Indian stocks linked to artificial intelligence and power infrastructure faced a sharp selloff on October 15, tracking a broader retreat in global markets. Technology and power equipment shares saw declines between 3% and 6%, as concerns over US interest rates and the sustainability of massive AI-related spending caused a shift in market sentiment.
The decline began following the release of US consumer price data for September, which showed inflation rising at its fastest pace in five months. The prospect of persistent inflation has increased the probability of further Federal Reserve interest rate hikes by December. For investors, higher interest rates often mean that the future profits of fast-growing tech companies are valued lower today, leading to a quick correction in stock prices. This trend was visible globally, with major chipmakers like Nvidia and AMD leading the decline, which then spilled over into Indian tech-focused companies such as Netweb Technologies, E2E Networks, and ESDS Software.
Beyond technology, the selloff impacted power infrastructure companies that provide the equipment for energy-intensive AI data centers. Firms like Hitachi Energy India, GE Vernova T&D India, and CG Power and Industrial Solutions, which were previously beneficiaries of the AI-led infrastructure boom, also recorded significant losses. The shift in sentiment suggests that investors are becoming more cautious about whether the current level of capital spending on AI will generate profits in the near term.
This concern is linked to the nature of capital-heavy sectors. Power equipment manufacturers depend on steady, long-term order books and corporate investment to fund their growth. If rising interest rates lead to a slowdown in corporate expansion or if companies begin to question the return on investment for large-scale AI projects, the demand for power grid upgrades and data center infrastructure may be re-evaluated.
For investors, the current market environment highlights the difference between long-term growth stories and near-term market volatility driven by macroeconomic data. While the fundamental demand for AI infrastructure remains a key point of discussion, the ability of these companies to maintain profit margins amid high borrowing costs and potential slowdowns in order flow will be the main factor to monitor. The market will likely watch how these companies manage their order books and whether they can continue to show growth despite the global shift in interest rate expectations.