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India's proxy AI trade shines in a bleak year for stocks

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India's proxy AI trade shines in a bleak year for stocks

Business News Tech AI India's proxy AI trade shines in a bleak year for stocks

Despite a notable decline in the Nifty 50 index, Indian stocks tied to artificial intelligence have surged impressively. Key players like optical fibre manufacturers and data centre developers are witnessing remarkable gains as foreign investors seize opportunities amid strong demand. However, some analysts express caution over potentially inflated valuations, suggesting this sentiment could influence future investments in these burgeoning sectors.

A handful of Indian stocks seen as proxies for the global artificial intelligence boom have surged this year even as the broader market, which has few listed AI beneficiaries, has struggled. India's benchmark Nifty 50 index has fallen 13% in 2026, putting it on track for its worst year since 2011. MSCI's emerging markets index, by contrast, has gained more than 18% so far this year. Half of the top 10 gainers on India's broader Nifty 500 index this year are linked indirectly to AI, highlighting investor appetite for companies supplying the infrastructure needed to support the technology.

"AI requires a huge amount of physical infrastructure, including electricity, transmission equipment, fibre connectivity, cooling, and data centres," said Rita Tahilramani, investment director of Asian equities at Aberdeen Investments. "Indian companies are increasingly participating in these 'picks and shovels' opportunities," she said. Shares of optical fibre cable maker Sterlite Technologies for example, have surged 804% this year, making it the Nifty 500's top performer. "Robust data center addition and constrained supply is driving (an) optical fibre cable demand supercycle," analysts at Nomura said in a note last week.


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