Richard Harris, CEO of Port Shelter Investment Management, has indicated that India's market valuations could attract Foreign Institutional Investors (FIIs) back to the country as the artificial intelligence-driven rally in Western markets continues.

Harris discussed the broader implications of AI-driven liquidity flows, India's market outlook, and the potential for foreign investors to return to emerging markets. His remarks touch on the dynamic between the concentration of capital in AI-related equities in developed markets and the relative valuation appeal of emerging markets such as India.

The comments come amid ongoing debate among market participants about whether the surge in AI-related stocks—particularly those of companies such as NVIDIA—has created a valuation premium in Western markets that could prompt investors to rotate capital into emerging markets. India, as one of the largest emerging market economies and a major constituent of benchmark indices such as the MSCI Emerging Markets Index tracked by global allocators, has historically been a significant destination for FII capital. The country has also been among the fastest-growing major economies, a fundamental factor that has underpinned its positioning within emerging-market portfolios.

Foreign Institutional Investors are a key source of liquidity for Indian equities, and their inflow and outflow patterns are closely tracked by market analysts. FII positioning data is published regularly by Indian depositories and monitored by the Securities and Exchange Board of India (SEBI). Periods of heavy FII selling have often coincided with global risk-off sentiment, while renewed inflows have tended to support Indian market indices such as the BSE Sensex and the NSE Nifty 50.

The article was originally published by CNBC-TV18 Markets.

Source: CNBC-TV18