India's 70% Underperformance Is an AI Hedge: Kothari
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- DSP's Jay Kothari estimates Indian equities have cumulatively underperformed emerging and global markets by nearly 70% over the past two years — a divergence he considers unprecedented and expects to mean-revert in India's favor
- Indian equities compounded at roughly 20% before the AI-led rally, compared with 5–6% gains in Korea and Taiwan over the same pre-AI period
- India's market lacks hardware and semiconductor segments, which Kothari says drove 50% of growth in emerging and global markets — leaving only one of three global tech components present locally
- Impending IPO supply diverts capital from secondary markets, with foreign investors reportedly selling existing holdings to fund IPO purchases, per Kothari
- Kothari cautions retail investors against chasing momentum-driven decisions, urging thorough research or reliance on trusted expert guidance before committing capital
- Exceptional performers delivering 30–100% compound annual growth are 'genuinely rare' across markets, Kothari says — warning retail investors not to treat such outliers as realistic benchmarks for the broader cycle
Why it matters: Kothari's contrarian frame recasts India's ~70% two-year underperformance not as a red flag but as a mean-reversion setup, yet his selectivity mandate — focusing on mispriced individual companies over market-cap buckets and resisting momentum — means retail investors chasing the IPO wave face real capital-diversion risk that even foreign investors are already pricing in by selling secondary holdings.
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