As global benchmarks continue to fluctuate, NSE Nifty 50 index is becoming a safe haven of sorts.
issued Sunday, July 5, 2026 · 11:16 am
Indian stocks, which lost out on the global rise in artificial intelligence, 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 fluctuated more than 1% on just about a third of days, lower than the MSCI Emerging Markets Index and barely above the S&P 500 Index.
India’s lack of AI plays has been a stumbling block for much 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. He says 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’ upcoming earnings season, which begins on Thursday (July 9).
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“The fall in commodity prices changed India’s macro outlook almost overnight,” said Sandip Sabharwal, founder of research firm Asksandipsabharwal.com in Mumbai.
“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 said in a note to clients last month that India has become a “much larger macro asset class.”
They said 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.
Over the past decade, the Nifty 50 has almost tripled, registering an annual gain of more than 10% in six years.
The benchmark index had 38 sessions in which it moved more than 1% 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.
South Korea’s Kospi is off the charts, with a change of at least 1% in 79 days, which is two-thirds of the number of days in 2026.
Meanwhile, India’s NSE Volatility Index declined for the third straight month in June, falling below the one-year average on Friday, its lowest level since February.
This is a sharp contrast from April, when the options price index was at a one-year high compared to the CBOE volatility index, just after the Nifty 50 plunged to its lowest level.
Kurti Shah, quantitative analyst at Equilus Securities, sees a “bullish undertone” in the Nifty 50 stocks and favors call spreads to bet on further gains, adding that the upcoming earnings season could bring some positive surprises.
Ben Powell, chief investment strategist for the Middle East and Asia Pacific at BlackRock Investment Institute, said India was “hamstrung early this year by high energy prices, high valuations and limited exposure to AI trade.”
“As these pressures ease, investors may look beyond AI-heavy markets,” he added. “This could put India back on the radar of investors as a differentiated opportunity in emerging markets.”Bloomberg
