India Can Be a Non-AI Hedge as Global Capital Seeks Diversification Says Mirae Asset's Swarup Mohanty

Why It Matters

The view positions India as a diversification play for investors fatigued by AI hype, highlighting a potential shift of billions into a high‑growth, non‑AI‑centric market.

Key Takeaways

• India offers a “non‑AI hedge” as AI hype wanes
• IT firms must prove AI capabilities to stay relevant
• 6% GDP growth makes India attractive amid global diversification
• Valuation corrections could trigger renewed capital inflows

Pulse Analysis

The AI frenzy that has dominated global equity markets over the past two years is beginning to show signs of saturation. While U.S. and Korean firms race to develop chips and generative‑AI platforms, Indian technology companies—largely focused on services and outsourcing—have seen their valuations compress as capital chases pure‑play AI names. Mohanty argues that this rotation does not signal a permanent decline for Indian IT; rather, it underscores the sector’s need to embed AI into its service offerings to remain competitive in the next technology cycle.

India’s macro backdrop provides a compelling counterweight to AI‑centric risk. With real GDP expanding at roughly 6% annually, the country outpaces most advanced economies, even after accounting for the recent oil‑price shock that trimmed growth by about 1%. This robust growth, combined with a large domestic consumer base and policy continuity, makes the market an attractive diversification target for fund managers seeking stable, high‑growth exposure. The Korean market’s recent rebound after a prolonged lull offers a precedent: once investors recognize a country’s structural strengths, capital can flow back with vigor, delivering outsized returns.

Valuation dynamics will likely dictate the timing of that capital return. After a period of perceived overvaluation in 2024, Indian equities have corrected, creating entry points for disciplined investors. Mohanty stresses that buying quality stocks at reasonable prices will unlock the “non‑AI hedge” narrative, as global funds rebalance away from saturated AI allocations. For Indian IT firms, the imperative is clear: showcase tangible AI capabilities to capture emerging demand while leveraging the country’s broader growth story to attract diversified, long‑term capital.