India’s valuation premium over regional peers is narrowing as AI-driven rallies in Taiwan and South Korea attract foreign investors, while muted earnings growth and sustained FII outflows continue to weigh on domestic equities.

India — once regarded as the most expensive equity market in the region — is quietly losing its valuation premium over other emerging markets. One key reason is the absence of a strong artificial intelligence (AI) investment theme, which has attracted foreign investors towards markets such as Taiwan and South Korea.
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