India missed AI wave, market darling run may end

India's exclusion from the artificial intelligence boom may be ending its years-long run as a favoured emerging market for global investors, according to an analysis. The country has not produced a major AI platform or chipmaker, while rivals like China and the US have attracted massive investment in the sector. This structural gap is now raising concerns about India's long-term growth story.

Foreign portfolio outflows from Indian equities have accelerated in recent months, with net selling exceeding Rs 1.1 lakh crore since October. The benchmark Nifty 50 index has fallen about 8 per cent from its September peak. Analysts cited in the piece argue that India's stock valuations were already stretched and the absence of AI exposure leaves the market without a new growth catalyst.

The Japan Times report contrasts India with Taiwan and South Korea, which have benefited from AI-linked semiconductor demand. It notes that India's IT services companies, while globally significant, are not direct beneficiaries of the AI infrastructure spending that is driving returns elsewhere. The piece concludes that the country's equity market must now rely on domestic consumption and policy reforms to sustain investor interest.