The frenzy surrounding artificial intelligence (AI) that gripped global markets for months appears to be cooling off. A new report suggests this shift could pave the way for foreign institutional investors (FIIs) to redirect their capital back to India.
During the peak of AI excitement, investors poured billions into U.S. tech giants, driving up valuations to unsustainable levels. Indian equities, meanwhile, suffered heavy outflows as FIIs chased the AI boom across the Atlantic. Now, with the hype deflating and U.S. markets showing signs of fatigue, eyes are turning eastward.
Analysts point to several factors fueling this potential reversal. India’s robust economic growth, stable macroeconomic environment, and attractive valuations make it a compelling destination. ‘The AI bubble’s burst is creating opportunities in emerging markets like India,’ noted a leading financial strategist.
Key sectors such as banking, IT services, and consumer goods stand to benefit most. FIIs have already begun nibbling at the edges, with recent data showing modest inflows after months of relentless selling.
Market experts caution that while the trend looks promising, geopolitical risks and global interest rate trajectories remain wild cards. Nonetheless, the report forecasts a significant FII comeback by early next year, potentially injecting much-needed liquidity into Indian bourses.
For Indian investors, this signals a period of renewed optimism. Stocks that were battered during the outflows could see sharp rebounds as foreign money returns.