On 5 November, US technology stocks saw their worst day since April 2025. The Nasdaq composite index fell 5.5% after Democrats swept the US midterm elections, raising fears that new limits on data centres could slow AI spending. Indian stocks moved the other way. Foreign investors bought $1.6 billion of Indian shares that day, their largest one-day purchase in nearly six years, according to exchange data.
Analysts at JPMorgan and elsewhere now call India a hedge against the AI trade. However, India is not completely insulated from the risks—the exposure goes beyond the stock market as it runs through equipment suppliers, IT services firms and a planned data centre build-out.
India's appeal during the rout comes from its low exposure to AI. Companies related to AI account for about 16% of MSCI India's value, against 70-80% in Taiwan and Korea, according to Goldman Sachs. Chipmakers dominate those markets. On 6 November, South Korea's Kospi closed 6% lower as SK Hynix fell 10% and Samsung Electronics 6%, while the Nifty 50 rose about 2%.
The same low exposure hurt India earlier in the year. Its lack of AI-linked stocks kept foreign investors away, Reuters reported, and they sold a record $30 billion of Indian shares between January and October. The Kospi was still up 20% for the year on 6 November. The Nifty 50 was down about 6%.
Some investors now treat that gap as protection. JP Morgan describes India as an "AI hedge" for funds cutting crowded AI positions. Goldman's Timothy Moe expects markets less exposed to AI, such as India, to see "some relative outperformance". Bernstein says India is "neither an AI beneficiary nor an anti-AI trade", pointing to its valuation of 18.6 times forward earnings, higher than in South Korea and Taiwan.