Global AI correction may redirect capital flows to India: Uday Kotak
Synopsis
Uday Kotak is making a contrarian bet: the same AI investment frenzy that pulled $29 billion out of India in 2026 could, if it reverses, send capital right back. With Indian equities already up 10% from October lows and valuations narrowed, Kotak's argument is that India's AI-agnostic growth story is precisely what stretched global portfolios may need next.
Key Takeaways
Uday Kotak said on 5 November 2026 that a global AI investment correction could redirect foreign capital to India.
Global investors have pulled a record $29 billion from Indian markets in 2026 due to high valuations and limited AI-linked opportunities.
Indian equities have recovered nearly 10 per cent from early October lows; tech-heavy Asian markets fell more than 7 per cent in the same period.
The Sensex surged to an intraday high of 79,465.03 and the Nifty to 24,579.90 on Thursday, each gaining over 2 per cent .
Kotak advised investors to prioritise quality and risk management over a medium-term horizon rather than chasing short-term swings.
Veteran banker Uday Kotak, founder of Kotak Mahindra Bank, on Thursday, 5 November 2026, said India stands to attract fresh foreign capital if the global artificial intelligence (AI) investment cycle loses steam. Speaking in a virtual address, Kotak argued that heavy borrowing by global corporations to fund AI ambitions has stretched valuations in several markets — and a reversal could redirect flows toward India.
Kotak's Core Argument
'If that reverses, India could benefit from reverse flows as it builds its own AI capability,' Kotak said. He pointed out that Indian equities have recovered nearly 10 per cent from their lows in early October 2026, even as AI-linked stocks globally have come under pressure. Tech-heavy Asian markets, by contrast, have declined more than 7 per cent over the same period.
The Foreign Investor Exodus — and Why It May Reverse
Global investors have withdrawn a record $29 billion from Indian markets in 2026, driven by elevated valuations, limited AI-linked investment opportunities domestically, and rising energy prices. Despite this, Indian equities have held firm, supported by sustained confidence among domestic investors. Kotak noted that India's valuation gap with other markets has narrowed following the recent correction, making stocks comparatively less expensive than they were six to twelve months ago. The country's stronger growth outlook remains its key structural advantage, he added.
Market Reaction on Thursday
Indian equity benchmarks surged sharply on Thursday, with the Sensex and Nifty rising more than 2 per cent to intraday highs of 79,465.03 and 24,579.90, respectively. The Sensex opened at 78,910.94, up 1,609.54 points or 2.08 per cent, while the Nifty began the session at 24,378.05, up 417.45 points or 1.74 per cent. The buying momentum was attributed to a fall in crude oil prices and the outcome of the US midterm elections.
Investment Strategy Advice
Kotak advised investors to focus on quality companies and disciplined risk management with a medium-term horizon, cautioning against chasing short-term market moves. This comes amid a broader recalibration of global capital allocation, as AI-driven valuations in the United States and parts of Asia face scrutiny over earnings sustainability. India's domestic-demand-led growth story, relatively insulated from AI capex cycles, could become a differentiating factor for global portfolio allocators seeking lower-volatility emerging-market exposure.
Point of View
And $29 billion in FII outflows is a structural signal, not just a cyclical blip. India's limited AI-linked listed universe, which drove some of that exodus, is not fixed overnight by a global correction. The more durable question is whether India can build enough AI infrastructure and listed exposure to retain flows when they do return, rather than merely serving as a temporary safe harbour for risk-off capital.
NationPress
5 Nov 2026
Frequently Asked Questions
What did Uday Kotak say about India and the global AI correction?
Uday Kotak said that if the global AI investment surge reverses, India could benefit from capital redirected toward its markets, as it builds its own AI capabilities. He made the remarks in a virtual address on 5 November 2026.
How much have foreign investors withdrawn from Indian markets in 2026?
Global investors have pulled a record $29 billion from Indian markets in 2026, driven by high valuations, limited AI-linked investment opportunities, and rising energy prices, according to available data.
How have Indian equities performed compared to global AI-linked markets?
Indian equities recovered nearly 10 per cent from their lows in early October 2026, while tech-heavy Asian markets declined more than 7 per cent over the same period, reflecting India's relative resilience.
Why did Sensex and Nifty rally sharply on 5 November 2026?
The Sensex and Nifty rose more than 2 per cent each on Thursday, with buying momentum attributed to a fall in crude oil prices and the outcome of the US midterm elections. The Sensex hit an intraday high of 79,465.03 and the Nifty reached 24,579.90.
What investment advice did Uday Kotak offer?
Kotak advised investors to focus on quality companies and disciplined risk management with a medium-term horizon, rather than chasing short-term market movements amid ongoing global volatility.
