As global markets remain fixated on the artificial intelligence (AI) boom, India stands apart — not because it has missed the trend, but because it may actually benefit from avoiding the frenzy. While technology giants like Nvidia, TSMC, and Samsung dominate valuations in the US and Asia-Pacific, India’s equity landscape remains largely anchored in domestic-focused sectors such as financial services, consumer goods, and infrastructure.

According to a report by Elara Capital, India’s lack of pure-play AI exposure offers insulation from a possible global tech correction. The note points out that AI-driven valuations worldwide have stretched to near-bubble territory, with trillions added to market caps despite uncertain earnings streams. “This insulates India from AI-specific corrections,” the report said, adding that a recalibration of global capital may actually work in India’s favor.

Data from Elara Capital, based on 15 years of EPFR fund-flow patterns, shows that since 2020, global investor interest has become increasingly concentrated around AI-driven markets, particularly the US, China, and Taiwan. During the November 2024 peak, the US alone absorbed nearly 89 percent of all foreign equity inflows — four times its long-term average — reflecting how liquidity cycles are now tied closely to AI themes and US tech stocks. In contrast, India’s share of emerging-market flows plummeted to just 0.4 percent, down from its long-term average of 6.3 percent.

Also Read: India Seals Historic LPG Deal With US, To Source 10% Of Imports In 2026: Hardeep Singh Puri

This trend has produced an unusually narrow global fund concentration, with the IT sector capturing a record 36.2 percent of peak flows as of August 2025, the highest in over a decade. Analysts warn such extreme clustering elevates the risk of sharp sector rotation when AI valuations cool. The Bloomberg AI Index, tracking 45 global AI-linked companies, has already moderated over the past month, while Taiwan and China’s AI-heavy markets have seen visible corrections. Elara Capital believes even a mild 10–20 percent valuation pullback could trigger a meaningful shift toward under-owned, fundamentally stronger markets like India.

For India, the message is clear: underexposure to AI may currently appear as a missed opportunity, but in reality, it provides insulation from systemic risks brewing in overheated tech markets. With a strong domestic-demand base and steady earnings growth from financials, consumer, and infrastructure sectors, India could become a prime beneficiary once global investors rotate away from concentrated AI plays. As the report concludes, “When AI valuations cool, Indian markets could be the preferred choice.”

Also Read: ISRO Confirms Chandrayaan-4 for 2028, Plans Threefold Rise in Spacecraft Production