4 days ago
India’s AI Absence Could Become a Portfolio Advantage
India’s stock market has often done well over long periods as the country’s economy and companies grew.
But lately, Indian shares have fallen behind some other markets.
The article says one reason may be that India has fewer companies directly tied to the artificial intelligence boom.
Investors around the world have put a lot of money into AI-related businesses and infrastructure.
That could be risky if those investments move together and lose value at the same time.
Arvind Chari thinks India’s different mix of businesses might help balance that risk.
This is an argument for considering India as one part of a diversified portfolio, not a promise that its market will rise.
The article also says past returns do not predict future results.
The article says India’s long-term economic growth has generally translated into corporate earnings and stock-market returns, often alongside a valuation premium.
From September 2024 to July 2026, the MSCI India Index returned -12.5% in US dollars, while several other emerging markets gained.
Foreign investors sold more than $50 billion in Indian equities since September 2024, and India’s MSCI emerging-markets index weight fell from about 20% to roughly 11%.
The author links India’s underperformance partly to its lack of prominent AI-related investment opportunities, while markets such as Taiwan and Korea benefited from the AI theme.
Arvind Chari argues that India’s lower exposure to AI could help diversify portfolios if risks tied to the global AI trade rise; the article cautions that past performance does not guarantee future results.
- Who
- Arvind Chari, Chief Investment Strategist at Quantum Advisors India group, presents the analysis.
- What
- The article argues that India’s limited exposure to AI investments, previously associated with market underperformance, may make Indian equities a portfolio diversifier.
- Where
- India and global emerging-market investment portfolios.
- When
- The market comparisons and investor-flow data are reported through July 31, 2026; the article discusses underperformance since September 2024.
- Why
- The author says global portfolios may have substantial, correlated exposure to AI-related stocks and other assets, creating a potential need for diversification.
India as a potential diversifier
Risks and limits of the thesis
India’s limited AI exposure
India as a potential diversifier
The author says India’s lack of prominent AI-related investment plays has contributed to underperformance but could now help diversify portfolios exposed to the AI trade.
Risks and limits of the thesis
The article gives no opposing analyst’s view; it also does not establish that India will outperform if AI-related investments weaken.
Future market returns
India as a potential diversifier
The author points to India’s historical link between economic growth and stock-market returns as part of the long-term investment case.
Risks and limits of the thesis
The article states that past performance is not indicative of future results and that future outcomes are uncertain.
Key facts
- Foreign investor sales
- More than US$50 billion in Indian equities since September 2024, according to the article.
- India’s MSCI EM index weight
- About 11% in July 2026, down from a peak of about 20%.
- MSCI India return
- -12.5% gross total return in US dollars from September 2024 to July 2026.
- MSCI Emerging Markets return
- 58.9% gross total return in US dollars over the same period.
- MSCI India technology allocation
- 7% as of July 31, 2026, compared with 30% for MSCI ACWI.
- MSCI India financials allocation
- 31% as of July 31, 2026, compared with 17% for MSCI ACWI.
- Article’s central investment thesis
- India’s lower participation in the AI trade could offer diversification against risks concentrated in global AI-linked investments.
Sources
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