(The views expressed here are those of the author, the founder

and CEO of Emmer Capital Partners Ltd.)

By Manishi Raychaudhuri

HONG KONG, Aug 3 (Reuters) - As Asia's AI-fueled stock boom

cools, a supposed "AI loser" is emerging from the wreckage as an

unlikely haven: India.

Indian equities' lack of direct AI exposure - whether to

creators of large language models or semiconductor and chip

manufacturers - dampened foreign investors' enthusiasm for the

country's stocks for much of 2025 and 2026, as money instead

flooded into South Korea and Taiwan's tech-saturated markets.

But that trend has shifted this summer.

Since mid-June, equities in South Korea and Taiwan

have stumbled, reflecting rising anxieties about the

durability and profitability of massive AI capital expenditures.

Meanwhile, India's benchmark stock index has climbed 5%

as money has pivoted to a perceived "anti-AI" trade.

This remains a modest change. The benchmark indices in South

Korea and Taiwan are up around 90% and 80%, respectively over

the past 12 months, compared to being down 5% for India.

But this recent rotation may be more than just a short-term

defensive move, as it comes at a fortuitous time for India,

coinciding with several tailwinds in the domestic economy. At

the same time, India is finding its place in the AI ecosystem,

meaning it could turn out not to be an anti-AI trade after all,

but a different, less concentrated type of tech bet.

MARKET TAILWINDS

Recent macroeconomic data in India has been encouraging on

several fronts. Accelerating bank loans and fixed-asset

investment signal a pick-up in both consumption and investment.

More broadly, annualized real gross domestic product growth of

7.8% in the first quarter has kindled expectations that the 6.6%

and 6.4% growth forecasts for 2026 from the World Bank and the

International Monetary Fund will be outpaced.

Foreign portfolio investments are reviving, too. While

overseas investors sold $29 billion of Indian equities in the

first half of the year, they then turned around to buy $1.7

billion in the first few weeks of July.

Foreign investment in Indian fixed income had already recovered

in the prior month. This was likely in response to several

government policies, including exempting foreigners from paying

withholding tax and capital gains tax on government securities.

Another measure to reduce foreign exchange hedging costs for

Indian commercial banks serving foreign accounts is widely

expected to mobilize about $50 billion in deposits from

non-resident Indians.

Those inflows into Indian markets, in turn, could help

stabilize the volatile rupee. This currency is down 6.5% against

the U.S. dollar so far in 2026, though it briefly recovered 2.6%

after the U.S.-Iran ceasefire in March before sliding again in

late June.

Last but not least, consensus earnings for India's largest

companies are rising in several sectors. According to FactSet,

consensus earnings-per-share estimates for India's financials,

telecommunications, process industries, consumer services and

basic materials have been upgraded over the past month,

reversing a trend of consistent downgrades over the past two

years.

THE ANTI-AI PLAY?

India's "anti-AI" moniker may also be a bit too simplistic,

as the technological revolution is not bypassing the country.

While it's true that India's large call service and back

office industry is highly vulnerable to AI disruption, that's

only one side of the AI equation.

India appears to be evolving into one of the key locations where

AI is being deployed at scale. Fueled by a massive, multilingual

population, ubiquitous smartphone access and highly affordable

data, mass usage of AI is soaring across Indian cities,

according to a recent report by the ADP Research Institute. The

report finds that over 40% of Indian employees report using AI

every day, double the global average.

In turn, investment from global AI providers in

infrastructure in India is also accelerating. This includes

spending on high-performance servers, power generation and

transmission equipment, and industrial cooling.

Over the next five years, the massive tech infrastructure

outlays in India include $57 billion collectively by Google

, Microsoft ( MSFT ) and Amazon ( AMZN ), $100 billion

by Adani Group and $30 billion by Blackstone. These

figures underscore the scale of the India market, home to the

world's most populous country, which has a median age under 30.

The appropriate categorization of the Indian market's

relationship with AI is therefore not "anti-AI" but

"anti-AI-concentration".

NOT A HOME RUN YET

While things are looking better for Indian equities, a

sustained rally is by no means a slam dunk.

The recent dismantling of the U.S.-Iran ceasefire agreement and

resumption of military conflict, accompanied by a spike in oil

prices, is a reminder of the macroeconomic risks that large

energy importers like India face.

After Middle East hostilities flared up again in early July,

Brent crude prices surged over 30% and the Indian rupee

fell against the dollar. Oil prices have since come down,

but further volatility in energy prices is likely as a

sustainable resolution to the U.S-Iran conflict still appears

far off.

And crude prices are far from the only factor putting upward

pressure on India' consumer price index. The 4.4% reading in

June, which remains above the RBI's medium-term midpoint target

of 4.0%, was driven largely by food prices - and that

inflationary pressure may intensify given India's weak monsoon

season. That, in turn, could trigger the onset of a rate-hiking

cycle by the Reserve Bank of India.

Indian equities have had a few good weeks. Whether that can

translate into a true shift in investor positioning will depend

on how worried investors truly are about AI-concentrated markets

and also how the technological and geopolitical ructions of the

past six months impact India itself.

(The views expressed here are those of Manishi Raychaudhuri, the

founder and CEO of Emmer Capital Partners Ltd and the former

head of Asia-Pacific Equity Research at BNP Paribas Securities.)

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(Writing by Manishi Raychaudhuri; Editing by Marguerita Choy and

Anna Szymanski)