Indian billionaire Uday Kotak says AI correction could send foreign money to India

Uday Kotak, the founder of Kotak Mahindra Bank Ltd. and Asia's richest banker, said a correction in the global artificial intelligence boom could send foreign money back into India, which has lost a record amount of overseas investment this year.

Kotak said in a virtual address ahead of Diwali on Thursday that global companies had borrowed heavily to fund their AI plans, leading to "significant overvaluation in many cases."

"If that reverses, India could benefit from reverse flows as it builds its own AI capability," he said.

Record outflows

Global investors have pulled a record $29 billion out of Indian stocks in 2026, citing the market's limited exposure to AI companies, expensive valuations and higher energy prices. The selling has left India among the worst-performing markets in Asia this year, while investors piled into chipmakers and technology companies in Taiwan, South Korea and Japan.

That gap has started to close. Indian equities have risen nearly 10% from their early-October lows, while tech-heavy Asian markets have fallen more than 7% over the same period as investors have grown more nervous about the cost of the AI build-out. Kotak said Indian shares had held up despite geopolitical uncertainty and heavy foreign selling, supported by domestic investors.

Valuations have also come down. The Nifty 50 index trades at about 17.5 times estimated earnings for the next 12 months, down from 21 times at the start of the year, though it remains well above the MSCI Asia Pacific Index at about 10 times. Kotak said Indian stocks were cheaper than they were six to 12 months ago and that the country's growth outlook remained its main advantage.

He advised investors to focus on quality companies, manage risk and take a medium-term view.

Indian markets rallied on Thursday. The benchmark Sensex rose more than 2% after a fall in crude oil prices and the outcome of the US midterm elections.

From a finance company to a bank

Kotak, 67, started Kotak Mahindra Finance in Mumbai in 1985 with seed money from family and friends, including industrialist Anand Mahindra, and turned it into one of India's largest private lenders. The company received a banking license in 2003. Kotak stepped down as chief executive in 2023 and remains a non-executive director and the bank's largest individual shareholder, with a stake of about a quarter.

He has a net worth of $16.5 billion, according to the Bloomberg Billionaires Index.