The numbers are stark. Global market capitalization tied to artificial intelligence has surged from roughly $35–40 trillion to $75 trillion in just three years. NSE MD and CEO Ashishkumar Chauhan pointed to this specific inflation as the primary reason global capital drained out of Indian markets during the same period. Investors chased the frontier AI narrative, leaving domestic equities to languish while funds flowed to the US, Taiwan, and South Korea. It’s a simple flight to growth, but the math is now shifting.
Chauhan argued that the AI cycle is running ahead of itself, with valuations in East Asian markets stretching past sustainable levels. This creates a vacuum. As the 'smart money' recognizes the exhaustion in those frontier markets, it begins rotating back into 'older and more reliable' emerging markets like India. The shift isn't speculative; it’s a rebalancing act driven by the realization that the initial AI rally has priced in most of the upside for pure-play tech giants in the West and East.
Where India fits into this new rotation is through its IT sector, which Chauhan described as the country's corporate 'superstars' for the last three decades. Contrary to fears that automation would undercut domestic software exporters, recent quarterly trends show the opposite. Indian IT firms are growing their top lines by implementing AI solutions using open-source tools at a fraction of the cost charged by Western frontier labs. They are becoming the low-cost workhorses of global AI implementation, a niche that is currently expanding.
The NSE chief also addressed the domestic IPO frenzy, advising promoters and retail investors to look past listing-day gains. "Whatever your IPO price is, it is not important. Where you reach is important," he said. He cautioned that squeezing valuations too tightly at the outset can backfire, as long-term performance over six months or a year ultimately determines the stock's trajectory. For promoters, a lower issue price can still yield significant returns if the company delivers, keeping a large portion of equity in their hands.
The bottom line for traders is clear: the narrative is moving from chasing high-growth AI stocks in the US and Asia to harvesting value in established Indian markets. With global liquidity beginning to re-enter the system, sectors that were previously overlooked may see a re-rating. Watch for continued strength in IT exporters and a broader stabilization in mid-cap valuations as this capital rotation plays out over the coming quarters.