India as an AI hedge? The country's stocks could see robust inflows as markets globally tank — SkimNews
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- Rajiv Batra of JPMorgan said foreign long-only investors, underweight Indian equities for nearly two years, could bring in around $115 billion by neutralizing that position, calling India an 'AI hedge' as the crowded AI trade unwinds.
- Nifty 50 gained nearly 9% over the past month, and on Friday Indian benchmarks rose while Japan's Nikkei 225 and Taiwan's Taiex entered bear territory, South Korea's Kospi deepened its bear market and the Nasdaq Composite fell into correction; Indian indices lean on financial services, consumption, energy and industrials rather than AI hardware.
- NSDL data shows foreign investors net sold more than $31 billion of Indian equities through October before turning net buyers over the past four days, investing over $2.3 billion.
- JPMorgan data shows earnings growth of listed Indian companies tracking above 20%, with consensus EPS estimates revised up 0.5% for 2026 and 0.6% for 2027 over the past month.
- Bernstein rejects the hedge pitch, arguing India is 'neither an AI beneficiary nor an anti-AI trade,' with the country at 18.6x forward 12-month earnings versus 9.3x for China and 7.9x for Brazil and at a premium to South Korea and Taiwan.
- Saurabh Mukherjea of Marcellus Investment Managers said there are 'easier and cheaper ways to hedge AI than investing in India,' while calling India's earnings growth 'stellar' for the last two quarters and noting some quality large caps trade at decade-low valuations.
- Hari Shyamsunder of Templeton Global Investments said the Nifty now trades below its 10-year average forward P/E and MSCI India was at its lowest forward multiple since 2020 in October, though high crude, a weak rupee and stronger growth opportunities elsewhere dilute the near-term appeal.
Why it matters: Goldman Sachs' Timothy Moe said India's domestic-demand engine gives it an edge among markets less exposed to the AI trade, but Bernstein counters that at 18.6x forward earnings investors are paying a premium for the hedge. Foreign buyers' $2.3 billion in four days marks a sharp reversal after $31 billion of outflows through October.
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