- India has lacked an AI investment story, deterring foreign funds for three years
- Foreign portfolio investors withdrew Rs 3.08 lakh crore from Indian equities in 2026
- AI benefits and revenues are being priced in by markets earlier than they will arrive
India's lack of an artificial intelligence story has kept foreign money away for three years, but investors will start rotating out of high-priced frontier AI labs and into Indian IT companies within one or two quarters, according to National Stock Exchange MD and CEO Ashishkumar Chauhan.
"India doesn't have an AI story," Chauhan said at NDTV Profit Ignite: Diwali Edition in Mumbai on Wednesday. "Most money from across the world went into only the US, and then two other markets. One is Taiwan, the other is Korea."
The shift is not new, he said. "It's not that today it's happening. [For] 3 years it's happening. And there are reasons. One of them is the AI story."
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The numbers bear out the pressure. Foreign portfolio investors have pulled Rs 3.08 lakh crore out of Indian equities so far in 2026, nearly double the Rs 1.66 lakh crore they withdrew in all of 2025, according to depository data. The Economic Survey 2025-26 had also linked tepid foreign flows to investor interest in AI-related assets in the US, Taiwan and Korea.
Chauhan said capital tends to leave markets without a compelling story for those that have one, and then reverses once the trade is stretched.
"When the markets move, people take money from a market which is not having that story. They go into those markets where the sort of story is there," he said. "Most of the time cycles actually run ahead of themselves. So when cycle runs over, the smart money starts moving out."
He argued that markets are pricing in AI's rewards too early. "All the benefits which are projected will take much longer, and the revenues will also take much longer to come," Chauhan said. "But people end up sort of estimating those revenues much ahead, and that's how they price those good-looking stories upfront."
IT Companies As AI 'Workhorses'
India's IT services firms, which Chauhan called the country's "superstars over the last 30 years," had been weighed down by fears that AI would erode their business. He said that view is changing.
"This quarter, whatever I'm hearing, is that they're actually growing their revenue because they're the same people who are getting... AI implemented at much lower cost than the frontier labs by using open source and other stuff," he said.
"One or two quarters, you will see [investors] basically come out of extremely high-priced frontier labs, coming to actually what I call workhorses, which are going to use AI," Chauhan said. "The workhorses, which are the IT companies, were kind of not kept in their portfolio. Now they'll start coming back."
The September-quarter results of the two largest IT firms offer some support. Tata Consultancy Services reported revenue of Rs 73,188 crore for the July–September quarter, up 11.2% year-on-year, with annualised AI revenue rising to $3.1 billion from $2.6 billion in the previous quarter. Infosys posted revenue of Rs 49,244 crore, up 11% year-on-year, with AI accounting for 10.5% of revenue after growing 29% sequentially, though it trimmed its FY27 constant-currency growth guidance to 1–2% from 1.5–3%.
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'Where You Start Doesn't Matter'
On companies weighing whether to list or postpone their IPOs, Chauhan, who said he has been in the business for 35 years, urged promoters to look past the issue price and listing-day gains.
"Where you start doesn't matter, right? Whatever is your IPO price is not important. Where you reach is important," he said.
Leaving some money on the table at the IPO is not a loss for promoters, Chauhan said, since they retain most of the stock. "At some point in time it'll go up. The prices will go up, and ultimately, large part of the stock is still with you as a promoter. So, in a way, you are also going to benefit."
A weak debut is not a disaster either, he said. "If the prices go down on listing, again, it's okay. If you're going to perform after 3 months, 6 months, whenever the results come, hopefully, it'll come up. So, broadly, most of us focus on the listing day and the gains."
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