AI retreat fuels India stock comeback in great rotation trade

详细摘要

India stocks rebound as AI trade unwinds, with foreign investors returning and earnings growth improving. Read more at straitstimes.com.

Global funds are turning more positive on India’s US$5.4 trillion equity market as oil prices retreat and earnings growth accelerates.

Indian stocks suffered bruising losses in the first nine months of 2026 as the artificial intelligence trade hoovered up global investor capital. The unwinding of that strategy has turned the Asian nation’s equities into world beaters.

The MSCI India gauge has rebounded 11% from a six-month low set in October, adding more than US$400 billion (S$515 billion) in value and almost erasing 2026’s losses, as the country’s relative lack of AI exposure has become a prime advantage.

Global funds are also turning more positive on India’s US$5.4 trillion equity market as oil prices retreat and earnings growth accelerates.

“We’ve become more positive on India and have added back to our exposure in recent weeks,” said Tan Altundag, an investment manager for emerging equities at Pictet Asset Management in Hong Kong.

“We see an improving balance between macro headwinds, portfolio flows and valuations,” while “diversification away from the increasingly volatile AI trade also appears likely to benefit India,” he said.

The bounceback in Indian shares over November illustrates a broader rotation by global funds away from crowded tech bets toward markets backed by strong earnings.

The shift signals a potential turning point for emerging markets as a whole, testing whether the world’s fastest-growing major economy can reclaim its status as a premier alternative to US tech giants after months of trailing its global peers.

A return of overseas investors has underpinned the rebound in Indian stocks, and the process may still have room to run as global funds remain largely underweight.

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