Tale of the Tape 

Hi ya’ll. The weekend is finally here! 

Markets saw decent gains, with the Nifty and Sensex up +0.4% each. This tracked with global markets that are factoring in a US Fed rate cut next week. Broader markets were in the green too as Midcaps (+0.3%) and Smallcaps (+0.6%) saw decent buying. The advance-decline ratio was in favour of the bulls (3:2).

Most sectors ended higher. Metals (+0.9%) and Auto (+0.5%) led the rally. FMCG (-0.7%) and PSU Banks (-0.3%) saw selling pressure.

In today’s issue of the Daily Rip, we look at why India’s AI story has failed to take off, decode JBM Auto’s insane +13% jump today, cover the weekly movers and shakers and more.

Honourable Mentions:

Hindustan Copper zoomed +12% after announcing a Rs 2,000-cr capex plan over the next 5-6 years. Lupin was up +3% after a double upgrade by Investec; it sees a further +7% upside from current levels.

Check out the NSE 500 heatmap:

AI
India’s AI Story: Over Before It Began?

US tech stocks are on a tear mainly because of one big thing: Artificial intelligence (AI). Back home though, AI is ripping through our tech sector with a lot more losers than winners. Why does our AI story suck so bad? Here’s a quick look.

Start with our IT industry. It’s been hit on three fronts. Firstly, clients hold back spending because they worry that future AI software could make current tech investments useless. Secondly, customers are using AI tools to totally replace certain IT sector functions (think chatbots replacing BPOs). And finally, whatever AI-led growth that Infosys & TCS are seeing will hurt margins; because they are less lucrative. PS - This is why Jefferies is projecting IT services growth at ~3% CAGR or less over 2024-29, its lowest in decades.

The IT sector is useless because they’re a billing machine; not a product one. The few product companies that exist are basically IT with a different colour of paint (think Zoho, Freshworks etc).

Now, there are a bunch of AI start-ups that are trying. You know the names: Ola Krutrim, Sarvam AI etc. All of them are working to build a homegrown LLM that actually can take on DeepSeek. But they’re facing an uphill battle. Funding is one battleground. AI investments in the US crossed over $109 billion in 2024 vs the GOI’s $1.2 billion.

Scale and competition is another. Perplexity stormed into India by tying up with Airtel, making their services free to 350+ million. OpenAI -- which is backed by $13 billion in funding -- has rolled out a sub $5 ChatGPT plan in India. They also plan to open their first office and invest millions in a local data center.

Do we stand a chance if the Govt doesn't help? As Bernstein puts it: “Competing with tech giants will take more than press releases; it demands bold policy action to ring-fence AI for domestic champions. So far, that courage is missing”.