Indian stocks recently enjoyed their best week in almost six years as Investors seeking a safe haven from AI are turning to India. The benchmark Nifty and Sensex indices both climbed more than 8.5% for their best weekly showing since February 2021, even as other Asian markets plunged amid a technology sell-off. Indian stocks have been lagging for the past two years as the attention of Asian investors turned to the “tech-saturated” markets of South Korea and Taiwan, says Manishi Raychaudhuri for Reuters.
The lack of AI champions has seen Indian stocks emerge as an “anti-AI” trade, with the market outperforming during technology sell-offs over the summer and again this autumn. India’s anti-AI reputation rests in part on the fact that its large industry of outsourced IT and back-office services is thought to be “highly vulnerable” to AI bots that could take over menial office tasks. The country lacks any large players to rival the likes of America’s Nvidia, Korea’s Samsung, or Taiwan’s TSMC.
But while that may be true of the stock market, “techmad” India is hardly an anti-AI country. More than 40% of employees report using the technology daily, double the global average.
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Indian stock markets remain dominated by old-school sectors such as banking and heavy industry, says Nikhil Inamdar for the BBC. But there are “early signs” of exciting developments in new industries including space, defence and semiconductors, says Bernstein Research. Most remain too small materially to influence capital-allocation decisions over much of this decade, however.
With foreign investors sitting on the sidelines, the only thing keeping the Indian stock market ticking over in the last two years has been the country’s burgeoning domestic equity culture. As The Economist notes, the proportion of Indian household net financial assets held in stocks more than quintupled in the four years to March 2025. Now sitting at 27% of household wealth, that figure still has room to “continue to grow”.
Are Indian stocks too expensive for investors?
Premium valuations have given investors pause. On a 12-month forward price-earnings (P/E) ratio of 18.6, Indian stocks remains far pricier than those in China (9.3) or Brazil (7.9). But that is nothing new. Since 2007, Indian stocks have traded at an average of 1.4 times the average valuations in emerging markets thanks to “durable earnings and a domestically driven growth engine”, Rajiv Batra of JPMorgan tells CNBC. The Nifty is now trading below its ten-year forward average P/E.
And with earnings growth now running at more than 20%, corporate performance is justifying richer valuations. There are signs that overseas investors are returning too. There is a wildcard. In a country that imports almost 90% of its oil, any renewed spike in the crude oil price could snuff out the nascent rally.
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