GREED & Fear Report: India stands at a fascinating crossroads. Artificial intelligence (AI) is widely viewed as a disruptive force, particularly for the country’s Rupee-heavy IT services sector, yet at the same time it is being embraced as a generational opportunity. According to the latest GREED & Fear report by Chris Wood, the mood in Delhi reflects both anxiety and ambition.
“The risks posed by AI may be at the forefront of investors’ minds at present. But in Delhi… there is also a lot of focus on the opportunity presented by AI for India,” the report stated.
Furthermore, the report pointed out that since peaking around September 2024, MSCI India has underperformed the MSCI Emerging Markets Index by 41% on a total-return basis. The index has been broadly flat in rupee terms but down 8% in US dollar terms over the same period. This relative underperformance, rather than an outright collapse, frames the current portfolio recalibration.
AI: Disruption for IT, Opportunity for India?
According to Wood, that while investors globally worry about AI-led disruption to India’s IT services industry, policymakers are focused on how the country can reposition itself in the AI value chain.
“There is general acknowledgment that the IT services sector faces the risk of genuine disruption and has no choice but to pivot. The widespread view is that the future role for IT services is as an enterprise AI consultant,” the report stated.
The likely transition, Wood argued, would mean slower revenue growth and potentially fewer jobs in traditional outsourcing. However, the pivot toward enterprise AI consulting — including partnerships such as Infosys’ tie-up with Anthropic — could define the next phase of the sector’s evolution.
The recent AI Summit in New Delhi underlined this dual narrative. Almost every major US Big Tech player attended, with the notable exception of Elon Musk. The event sent a clear signal: India intends not only to consume AI solutions but also to build them.
At the same time, India is aggressively positioning itself in AI infrastructure. To attract global capital, the government announced in the February 1 Budget a 21-year tax break — valid until 2047 — for eligible cloud providers constructing data centers in India for global operations. Investment commitments are already substantial. Amazon and Microsoft have pledged to invest US$35 billion and US$17.5 billion respectively in India by 2030, while Google has committed US$15 billion over the same period.
Wood maintains that while India remains the “reverse AI trade” in global emerging market portfolios, the Modi government’s approach has been constructive rather than defensive. India’s entrepreneurial base and technical talent are seen as strengths, though brain drain to Silicon Valley remains a risk.
Portfolio Changes: Rotating for the Next Cycle
Reflecting this shifting macro backdrop, GREED & fear has made notable changes to its India long-only portfolio.
In the India long-only portfolio, Home First Finance will be replaced by Adani Power. Le Travenues Technology (Ixigo) will be swapped for InterGlobe Aviation (IndiGo). Lemon Tree Hotels will be replaced by Indian Hotels. Additionally, exposure to ABB India will be increased by one percentage point, funded by trimming PolicyBazaar.
The report underlined that the key issue for India is relative positioning.
Although MSCI India has been broadly flat in rupee terms since that peak — and down 8% in US dollar terms — Wood is making tactical portfolio adjustments.
“The key point remains relative rather than absolute in the sense that MSCI India has underperformed the MSCI Emerging Markets Index by 41% on a total-return basis since its September 2024 peak,” Wood said.
For investors, the message is nuanced. AI may disrupt IT, but India’s broader reform story, infrastructure build-out, and entrepreneurial ecosystem continue to offer selective opportunities. The question now is not whether India participates in the AI era — but how its equity portfolio adapts to it.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
