India could attract renewed foreign investment if the global artificial intelligence (AI) boom loses momentum and investors shift towards markets offering better valuations, billionaire banker Uday Kotak has said.
The founder of Kotak Mahindra Bank warned that rising borrowing by global companies to finance AI expansion could be contributing to excessive valuations.
Speaking virtually ahead of Diwali, Kotak said India could benefit from a reversal in international capital flows while developing its own AI capabilities.
Indian equities have recovered nearly 10% from their early October lows, coinciding with a correction in global AI-linked stocks.
Technology-heavy Asian markets have declined more than 7% over the same period, highlighting India's relative resilience.
However, Indian equities remain among the region's weaker performers in 2026.
Foreign investors have withdrawn a record $29 billion amid concerns over expensive valuations, rising energy costs and limited exposure to major AI businesses.
Kotak, whose wealth is estimated at $16.5 billion, said domestic investors have continued supporting Indian markets despite geopolitical uncertainty and volatile international conditions.
He believes India's growth prospects and improving relative valuations could strengthen its appeal to global investors.
The benchmark Nifty 50 currently trades at approximately 17.5 times estimated earnings over the next 12 months, compared with 21 times at the beginning of 2026.
Although valuations have moderated, Indian stocks remain considerably more expensive than regional peers.
The MSCI Asia Pacific Index trades at around 10 times forward earnings, indicating that India continues to command a substantial premium.
Kotak said India's valuation position has improved compared with six to 12 months earlier, making equities relatively less expensive.
He also emphasised the country's stronger long-term growth potential.
For investors, Kotak recommended focusing on financially sound businesses and maintaining a medium-term investment horizon.
He cautioned against making investment decisions based solely on short-term market movements.
According to Kotak, disciplined risk management and selecting quality companies remain important as global markets navigate uncertainty surrounding AI investments and capital flows.
