Highlights
- Nvidia shares plunge 31% amid leadership uncertainty and turmoil.
- Foreign investors pump Rs 53,739 crore into Indian equities.
- Banks, autos and consumption stocks could attract investors.
For much of 2026, Indian equities struggled to attract foreign investment as global money chased artificial intelligence companies, particularly Nvidia, South Korean memory-chip manufacturers and Taiwanese semiconductor stocks. However, the recent turmoil surrounding Nvidia has raised an important question: Could India’s limited exposure to the global AI boom now work in its favour?
According to Sidharth Sogani Jain, Founder, CEO and Fund Manager at Blue Aster Capital and CREBACO Global, India had become the “inverse AI trade” as foreign investors withdrew approximately Rs 2.41 lakh crore from domestic equities during the year.
Nvidia’s 31% fall and Jensen Huang’s exit shake AI trade
Nvidia has witnessed a sharp correction over the past five weeks, with its shares declining approximately 31 per cent from their record closing level on October 6, according to figures shared by Jain.
On November 5 alone, the stock fell more than 9 per cent, wiping out approximately $447 billion in market capitalisation. The Nasdaq also declined 5.5 per cent amid concerns about AI spending and political opposition to data centre expansion in the United States.
The leadership shake-up came amid controversy surrounding Huang’s reported personal relationships and allegations involving potential national security risks linked to China.
For investors, the developments have added corporate governance and geopolitical concerns to an already challenging environment for AI-related stocks.
FII flows reverse: Rs 53,739 crore enters Indian equities
Amid the uncertainty surrounding the global AI trade, foreign investment flows into Indian equities have shown signs of improvement.
According to Jain, foreign investors invested Rs 53,739 crore in Indian equities during the first six trading sessions of November, following combined outflows of approximately Rs 70,700 crore in September and October.
The buying was concentrated in banking, information technology, automobiles and telecommunications.
Jain explained that when global investment portfolios become heavily concentrated in a particular theme, any disruption can trigger a reassessment of allocations.
India, as one of the world’s largest liquid equity markets with relatively limited direct exposure to AI hardware, could emerge as an alternative investment destination.
He also noted that valuations of Indian large-cap stocks have moderated following sustained foreign selling, potentially making them more attractive to global investors.
Why India’s limited AI exposure could become an advantage
The potential opportunity for Indian equities lies in their relatively lower dependence on the global AI infrastructure spending cycle.
While semiconductor manufacturers and AI infrastructure companies benefited from the investment boom, India’s equity market remained more closely linked to domestic consumption, financial services and economic growth.
This difference could now become an advantage if global investors seek to diversify their exposure away from heavily concentrated AI-related investments.
However, Jain believes the opportunity is likely to remain selective rather than extend uniformly across the Indian stock market.
He identified high-quality private sector banks, automobile companies and consumption-oriented businesses as the sectors best positioned to benefit from any sustained rotation in global investment flows.
His assessment of information technology stocks is more cautious, as AI itself is reshaping the traditional IT services business model and creating uncertainty around future growth opportunities.
Can the FII rotation last? Nvidia’s November 17 results hold the key
Despite the recent correction, Jain cautioned against assuming that the global AI investment cycle has permanently weakened.
He noted that Nvidia’s data centre revenue grew 117 per cent in the previous quarter, while the company’s shares are now trading at approximately 18 times expected earnings for the year, according to his assessment.
Strong financial results or reassuring management commentary could revive interest in AI-related stocks and potentially attract investment flows back towards the sector.
Jain also cautioned that one strong week of foreign inflows cannot reverse an entire year of selling.
The sustainability of foreign investment in India will ultimately depend on corporate earnings, valuations, domestic economic growth and broader global market conditions.