Global funds view Indian stocks as top hedge against AI risks

Sectoral gainers make domestic markets a good diversifier amid possible AI bust

- BLOOMBERG

India is drawing fresh attention from global fund managers looking to diversify equity investments in the coming year as worries over an AI bubble mount.

Aberdeen Group Plc sees Indian stocks staging a rebound next year, while Principal Asset Management Co. and East-spring Investments view the market's low correlation with AI trade as a hedge against global equities which have a huge concentration of tech. Strategists at HSBC Holdings Plc and Jefferies Financial Group Inc. expressed similar views.

With the AI frenzy fading and India’s stock valuations falling back near their five-year average after sharply trailing peers this year, the consumption-driven economy is back in favour. India’s equity gains are still driven by banks, consumer firms and services, offering a way to cut risks tied to a narrow group of AI winners.