From The Economic Times · PTI · · 1m
AI Absence Boosts India's Market Strength
India's lack of AI focus in equities could become its market strength within a year as foreign investors shift.
In brief
India's lack of AI focus in equities could become its market strength within a year as foreign investors shift. Chief Economic Advisor V Anantha Nageswaran predicts India's absence of AI trade will turn into a strength for equities within a year as foreign investors return to its fundamentals. Originally reported by…
AI Absence in Equities
The absence of artificial intelligence focus in Indian equities will become a strength in a year.
“If the AI boom stumbles, India is well placed to gain... one year from now, we might find that the absence of an AI trade, will turn up to have been India's strength.”
CEA's Market Prediction
Chief Economic Advisor V Anantha Nageswaran expects foreign investors to return to India's fundamentals after the AI boom stalls.
“I would submit that it is a matter of time before this happens.”
Rupee Depreciation Pressure
The rupee is likely to continue depreciating as it approaches lifetime lows.
“The rupee, which has seen some sessions of a depreciation and is hurtling towards its lifetime lows, is likely to continue being under pressure.”
Second Mover Advantage
India will gain a second mover advantage in the absence of AI trade opportunities.
“India is set to have a "second mover advantage" on this front.”
Four Headwinds
Four factors impact capital flows: US relations, AI trade absence, oil prices, and global rate tightening.
“All these four headwinds are exogeneous, and include the challenging relationship with the US, the absence of an AI trade, the West Asia conflict which has led to hardening of oil prices impacting an oil importing country like ours and the rate tightening by global central banks.”
India's Strengths
India's strong growth, small current account deficit, and capital market activity support its market resilience.
“Factors which are working in favour of India include the strong growth, wherein the country has been able to post over 7 per cent growth even in the face of repeated shocks in recent years, a small current account deficit which is manageable, well capitalised banking system, low corporate leverage and the movement of domestic savings into capital markets.”
The bottom line
Chief Economic Advisor V Anantha Nageswaran predicts India's absence of AI trade will turn into a strength for equities within a year as foreign investors return to its fundamentals.
