Global funds view Indian stocks as a top hedge against AI risks

Core Insights - India is gaining attention from global fund managers as a diversification option amid concerns over an AI bubble [1][3] - The consumption-driven economy of India is becoming favorable again, with equity gains primarily from banks, consumer firms, and services [2][7] - Major global tech companies, including Amazon and Microsoft, are investing significantly in India's AI infrastructure, although India lacks major pure-play AI companies [5] Group 1 - Global fund managers, including Aberdeen Group and Principal Asset Management, predict a rebound in Indian stocks next year due to low correlation with AI investments [1][3] - India's stock valuations have returned to near their five-year average, making it an attractive option for investors looking to mitigate risks associated with AI-focused equities [2][7] - The Indian economy is supported by favorable domestic policies, tax cuts, and a growth rate of 8.2% in the latest quarter, enhancing its appeal as a diversifier [3][7] Group 2 - Jefferies has identified Axis Bank, Bharti Airtel, and TVS Motor as top picks, anticipating that Indian equities will outperform if the global AI investment trend peaks [4] - The lack of major AI companies in India contrasts with China's market, which includes AI proxies and chip firms, providing different risk-return profiles for investors [6] - Investment managers believe that India's reasonable earnings expectations and domestic growth drivers present a strong backdrop for equity performance [7][8]