India’s lack of a homegrown artificial intelligence (AI) narrative has driven global capital toward the US, Taiwan and South Korea over the past three years, though “smart money” is now beginning to rotate back into older and more reliable emerging markets, National Stock Exchange of India (NSE) MD and CEO Ashishkumar Chauhan said today.
“Three years it’s happening and there are reasons. One of them is the AI story. India doesn’t have an AI story and most money from across the world went into only the US and then two other markets. The concentrated global rush into AI stocks has nearly doubled the market capitalisation of those beneficiaries over a three-year window, drawing liquidity away from Indian equities.
Literally, that surge is due to AI. “The cycle has run so much that today, out of a $75 trillion market cap, three years back it was probably $35 trillion or $40 trillion.
Speaking at NDTV Profit Ignite, Chauhan said global investors have spent the last three years pulling funds out of markets that lack a frontier AI presence to chase the rally elsewhere; however, with those cycles now running ahead of themselves, Indian IT firms are set to benefit as the lower-cost “workhorses” of AI implementation. One is called Taiwan and the other is Korea,” he said. We did not have that,” Chauhan said. When the markets move, people take money from a market which does not have that kind of a growth story and go where the new story is developing, according to him. “When that cycle runs over the smart money starts moving out and starts going into the older more reliable market,” he said, adding the signs of exhaustion are already visible in East Asian markets, where valuations have stretched past sustainable levels.
Instead, recent quarterly trends show domestic software exporters are expanding their top lines by deploying AI solutions via open-source tools at a fraction of the cost charged by Western frontier laboratories. The NSE chief also cautioned domestic company promoters and retail investors against fixating on initial public offering (IPO) issue prices and listing-day gains. Because they are the same people who are getting AI implemented at much lower cost than the frontier labs (by using open source and other stuff), “Now this quarter whatever I’m hearing is that they’re actually growing their revenue.
Their revenues are increasing,” Chauhan said.
“Whatever your IPO price is, it is not important. Where you reach is important. That’s where, once you list, if you have supposedly given slightly more money on the table, at some point in time the prices will go up. Ultimately a large part of the stock is still with you as a promoter. “If the prices go down on listing, again it’s okay. If you are going to perform after three months, six months, whenever the results come, hopefully it’ll come up.”
Back home, the global AI boom initially triggered a negative trend that automation would undercut India’s domestic IT sector which have been the country’s corporate “superstars over the last 30 years”. In a way you are also going to benefit,” Chauhan said, warning that squeezing valuations too tightly at the outset can backfire.
