India's stock market is losing its emerging market crown as artificial intelligence reshapes global investment flows. The country's benchmark has dropped over nine percent this year while Taiwan and South Korea surge on AI-driven gains. India's weight in the MSCI emerging markets index has plummeted to twelve percent from nineteen percent, with roughly two-thirds of that reallocation driven by AI positioning. Foreign investors are fleeing at accelerating rates, withdrawing forty-two billion dollars since year-end. The core issue isn't earnings misses but a fundamental revaluation of terminal value. Without direct exposure to chip manufacturing, computing infrastructure, and AI model development, India's market remains tied primarily to domestic consumption.
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