Market Brief: AI Volatility and Indian Tech Recovery Indian equity benchmarks experienced a pivotal session as the **Nifty 50** and **Sensex** navigated a landscape defined by sharp sector rotation. Following a period of intense pressure where the **Nifty IT Index** faced its steepest monthly decline in over two decades—dropping **21%** in February 2026—investors have begun pivoting toward a "buy on the dip" strategy. The recovery is being driven by a decoupling of sentiment. While traditional IT service giants like **TCS** and **Infosys** recently hit 52-week lows due to fears of AI-led disruption, specialized technology and semiconductor-adjacent firms are seeing a surge in demand. Semiconductor and AI Infrastructure Gains The global narrative around artificial intelligence has shifted focus toward hardware and testing infrastructure. **Advanced Micro Devices (AMD)** and **Keysight Technologies** have emerged as major beneficiaries. **Keysight Technologies** shares surged over **15%** to reach all-time highs following a standout Q1 report. The company reported a **23%** revenue increase, fueled by record orders from the AI, data center, and semiconductor sectors. Looking ahead, management has raised its Q2 guidance, forecasting revenue growth of **30%** and an earnings-per-share jump of **35%**. Similarly, **AMD** has maintained a resilient trajectory. Despite intraday volatility, the stock has effectively doubled from its **$110** levels in early 2025 to trade consistently in the **$200–$215** range this month. Domestic Market Dynamics In India, the broader market indices like the **Nifty 50** settled around the **25,424** mark, while the **Sensex** held near **82,225**. Despite the heavy sell-off in legacy IT, which saw the sectoral index plunge nearly **5%** in a single session, other pockets of the market are thriving. * **Nifty Metal Index:** Reached a fresh all-time high, gaining **14.30%** so far in 2026. * **AI-Focused Stocks:** Domestic players like **Persistent Systems** and **Saksoft** continue to attract interest, with Persistent holding a 5-year CAGR of **43.60%**. * **Institutional Shift:** Mutual funds have reduced IT exposure by over **₹70,000 crore**, redirecting capital toward sectors with clearer AI integration paths and stronger domestic cyclicals. Economic Sentiment and Outlook Market volatility remains elevated, with the **India VIX** rising **4.3%** to reach **14.79**. This reflects a cautious but proactive investor base reacting to global triggers, including shifting U.S. trade policies and the rapid deployment of AI coding agents like Claude Code. While the "labour-arbitrage" model of traditional Indian IT faces structural questions, the pivot toward AI infrastructure and high-end digital engineering suggests a selective but strong rebound for firms positioned within the new tech ecosystem.