MUMBAI: Indian stocks, which lost out on the global rise in artificial intelligence (AI), are regaining the attention of investors looking to weather the recent market turmoil.
As the AI frenzy shakes up benchmark indices from Asia to the US, the NSE Nifty 50 index is becoming a safe haven of sorts for global investors.
In the first half of this year, it moved more than 1% on only about a third of days, underperforming the MSCI Emerging Markets Index and barely beating the S&P 500 Index.
A lack of AI-related plays in India has been a stumbling block for most of this year, as investors turned to markets like South Korea and Taiwan, which have delivered impressive returns.
But interest in India is slowly returning amid growing concerns about trade sustainability.
The Nifty 50 index outperformed the MSCI Emerging Markets Index in June by the highest level since November, but foreign capital outflows were the smallest in four months.
“India’s tranquility boils down to being outside the AI trade,” said Maxence Visseau, chief investment officer at Arkebium Capital in Dubai.
His company is market neutral and uses the market as a means of diversification. “India is acting as an AI hedge within the emerging market complex.”
Indian stocks continue to be some of the world’s worst-performing stocks this year, but the tide is starting to turn as the rupee stabilizes after hitting a record low and the rise in oil prices that weighed on refinery and airline stocks due to easing tensions in the Middle East recedes.
A government report at the end of June said this eased inflation concerns and brightened the outlook for India’s economic growth.
At the same time, there is growing optimism among market participants regarding Tata Consultancy Services Ltd.’s upcoming earnings season, which begins on Thursday.
“The decline in commodity prices has changed India’s macro outlook almost overnight,” said Sandip Sabharwal, founder of research firm Asksandipsabharwal.com.
“Lower commodity prices, improving capital flows, and stable interest rates are creating an environment where earnings upgrades are likely to outweigh downgrades over the coming quarters.”
Morgan Stanley analysts including Ridham Desai wrote in a note to clients last month that India has become “a much larger macro asset class.”
“Less volatile inflation statistics in recent years have supported stock valuations, turning the market into a defensive growth market better able to withstand global shocks than before,” they said.
Over the past decade, the Nifty 50 has almost tripled, registering more than 10% annual growth over six years.
The benchmark index had 38 sessions with a price move of 1% or more in either direction in the first half of 2026, compared to 59 for MSCI’s emerging markets and Asia index and 32 for the S&P 500. — Bloomberg
