As sentiment around AI sours, foreign investors, who have been underweight on the Indian market for nearly two years due to high valuations, subdued earnings growth and lack of local AI tech champions, could start returning.
He said that multiple factors are currently stacked in favor of the country, such as falling global oil prices, a drop in U.S. Treasury yields, a recovery in earnings growth of Indian companies and unwinding of global AI trade.
"India has emerged as an 'AI hedge' for portfolios trimming or diversifying out of crowded AI trades," Batra said.
On Friday, as major Asian markets tracked a sell-off on Wall Street overnight, India's benchmark indexes bucked the trend to trade higher.
He added that markets like India and Australia that were less exposed to the AI trade will see "some relative outperformance," adding that India's "domestic demand story" gives it an edge between the two.
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The Indian stock market is emerging as an attractive hedge as investors seek refuge from a brutal sell-off in the artificial intelligence trade, making it a strong contender for global capital.
As sentiment around AI sours, foreign investors, who have been underweight on the Indian market for nearly two years due to high valuations, subdued earnings growth and lack of local AI tech champions, could start returning.
"If these foreign long only investor groups were to neutralize their underweight in Indian equities, this could translate into potential net inflows of around $115 billion," Rajiv Batra, head of Asia and co-head of global emerging markets equity strategy at JPMorgan, told CNBC.
He said that multiple factors are currently stacked in favor of the country, such as falling global oil prices, a drop in U.S. Treasury yields, a recovery in earnings growth of Indian companies and unwinding of global AI trade.
"India has emerged as an 'AI hedge' for portfolios trimming or diversifying out of crowded AI trades," Batra said.
Over the last month, the country's benchmark Nifty 50 has gained nearly 9%, outperforming global markets with heavy AI exposure, including the U.S., Japan, South Korea and Taiwan that are deep in the red as investors ditch tech names.
On Friday, as major Asian markets tracked a sell-off on Wall Street overnight, India's benchmark indexes bucked the trend to trade higher. That divergence becomes stark as Japan's Nikkei 225 and Taiwan's Taiex entered bear territory, while South Korea's Kospi deepened its bear market and the tech-heavy Nasdaq Composite entered into correction territory overnight.
"India has been dubbed sort of the anti-AI trade, and our view there is that the underlying economic fundamentals have actually been better," Timothy Moe, chief Asia-Pacific equity strategist and co-head of Asia macro research at Goldman Sachs, told CNBC's "Squawk Box Asia" on Friday.
He added that markets like India and Australia that were less exposed to the AI trade will see "some relative outperformance," adding that India's "domestic demand story" gives it an edge between the two.
