Vincent Mortier, CIO of Europe’s largest asset manager Amundi, expects foreign capital to pivot back to India as US interest rates stabilize and investor enthusiasm for artificial intelligence stocks faces a reality check. The firm, which manages over €2.6 trillion globally, cites India's robust macroeconomic indicators as a key reason for the potential inflow, offering a shift from the concentrated US tech trade.
Vincent Mortier, the Chief Investment Officer at Amundi, has indicated that global Foreign Portfolio Investors (FPIs) are likely to increase allocations to India in the coming months. Amundi, which is a significant player in the Indian market as an investor in SBI Funds Management Ltd, believes the current drought in foreign inflows is reaching a turning point.
The global investment outlook is currently being shaped by a correction in the artificial intelligence sector. For months, institutional capital has been heavily concentrated in US-based technology firms betting on AI. However, Mortier notes that the market is beginning to question whether the massive capital spending on AI infrastructure is being matched by actual cash flow and profit growth. As the cost of AI development tools begins to decline and market darlings face valuation hurdles, investors are expected to look for alternative markets with stronger structural foundations.
India’s Economic Positioning
Amundi points to India's macroeconomic stability as a primary attraction for long-term capital. While developed markets, particularly the US, grapple with the implications of a $40 trillion public debt load and high borrowing costs, India’s fiscal metrics—including its debt-to-GDP ratio and current account balance—remain more resilient. Mortier argues that as the US Federal Reserve pauses rate hikes, global liquidity will look for regions where structural metrics are stable rather than speculative.
For Indian investors, this view suggests that recent market volatility is seen by global managers as a temporary local correction rather than a sign of long-term weakness. Historical trends support this, showing that despite periodic drawdowns, markets with strong fundamental indicators tend to recover over the long term.
Impact on IT Services
The shift in global focus also has implications for the Indian IT sector. Amundi expects the industry to experience a period of fragmentation. The era where the entire sector moved in unison is fading. Instead, the performance gap is widening between firms that have successfully embedded AI into their services to create real value, and those that continue to rely on traditional, manual delivery models. Companies that fail to adapt their service offerings may face a tougher growth path, while those that effectively adopt new technologies may see better outcomes.
Investors should monitor the progression of global interest rates and any updates on FPI inflow data, which serve as a barometer for this shift. While the long-term outlook appears positive, significant risks remain. These include potential spikes in oil prices due to geopolitical tensions in regions like West Asia and Russia-Ukraine, which could pressure India’s inflation and fiscal stability. Additionally, a sharper-than-expected market correction in the global AI sector could trigger broader risk aversion that might affect emerging markets regardless of their individual strength.