{
  "id": 426947,
  "title": "India stages a comeback as AI trade gets crowded",
  "url": "https://urgent.news/2026/08/09/india-stages-a-comeback-as-ai-trade-gets-crowded",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-08-09T05:48:46.000Z",
  "source": {
    "name": "The Economic Times",
    "slug": "the-economic-times",
    "url": "https://economictimes.indiatimes.com/markets/stocks/news/ai-trade-gets-crowded-as-india-stages-a-comeback-what-fund-flows-reveal/articleshow/133062811.cms"
  },
  "original_language": "en",
  "account": "India is regaining prominence in the artificial intelligence (AI) investment landscape as global investors flock back into AI-linked markets, presenting an early test of whether the year's top equity trade can maintain its returns. According to Elara Capital, inflows into the AI sector surged for a second consecutive week after a recent dip, with foreign emerging market funds pouring in $4 billion, the highest amount in six months, as the EM index recovered from its 200-day moving average. South Korea contributed $3.5 billion, while Taiwan attracted $1.8 billion, its strongest inflow in 23 weeks. Global industrial funds also saw a $1.3 billion inflow, the highest in seven weeks.\n\nHowever, this renewed buying comes after the AI trade became increasingly crowded, and returns began to slow down. Elara Capital highlights the timing of these investments as a key factor to watch, as the correction has yet to trigger redemptions, leaving the long-term sustainability of accumulated positions a risk. India, experiencing a slowdown in fund outflows, is emerging as a strong contender. Long-only funds focused on India have faced redemptions since July 2025, with most capital being redirected towards AI-heavy markets like Taiwan and South Korea. While these funds are still losing money, the rate of withdrawals has eased in recent weeks. Since mid-June, India-focused long-only funds have outperformed their emerging-market peers by around 10%, their strongest performance since February-April 2025.\n\nHSBC strategists Prerna Garg, Herald van der Linde, and Yogesh Aggarwal believe India can act as an anti-AI diversifier. As technology-exposed markets experience sharp rotations, foreign investors may diversify their portfolios by allocating more to India. Over 80% of active global emerging-market funds remain underweight on India, according to HSBC, and a shift back to a neutral position could generate approximately $25 billion in inflows. Indian equities have risen by about 6% over the past six months, outperforming South Korea, which has been four times more volatile this year.\n\nValuation remains a significant constraint for India's AI market, as it continues to trade at the highest multiples in the region. However, HSBC notes that India's valuation premium to emerging markets has normalized, and the market is now near the lower end of its historical range. High-quality growth companies in sectors such as financials, automobiles, retail, and hospitals are favored by HSBC. Private banks and real estate have also become more attractive after prolonged underperformance. The bank recently upgraded India to a neutral stance within its Asian equity strategy, but investors must weigh India's relative stability and improving flows against faster earnings growth in AI-linked markets like South Korea and Taiwan.",
  "summary": null,
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}