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AI trade bubble burst flips foreign flows into India, outlook improves
Since late June, foreign investors have turned net buyers in India with inflows above US$2 billion, after being net sellers while AI beneficiaries saw heavy outflows.
Global markets have seen sharp reversals following the peak of the AI trade around 22 June 2026, with tech-led performance diverging across regions, LiveMint Markets said.
The outlet cited broad drawdowns across Asia, including declines of nearly 38%+ in Korea’s Kospi, 14%+ in Japan’s Nikkei, around 16% in Taiwan’s market, and about an 8% slump in China’s Shanghai Composite, while Hong Kong’s Hang Seng was cited as the lone notable gainer, up around 8%.
In the tech center of the AI boom, SK Hynix was cited as having dropped about 35% in one month, and Baidu was described as still down about 3% in a month despite some value buying. In the US, LiveMint Markets said major AI companies including Alphabet, Meta Platforms and AMD delivered zero returns over the past month, while the Nasdaq was reported to have slid roughly 8% from 26,518 to 24,443 before paring losses.
For India, LiveMint Markets highlighted a potential shift as FIIs turn net buyers again. According to TrustLine Holdings founder and CEO N. Aruna Giri, foreign inflows have exceeded US$2 billion since 22 June, while markets that benefited from the AI trade saw outflows estimated around US$25 billion from Korea, US$30 billion from Taiwan, and over US$7 billion from Japan, leaving Indian benchmarks broadly flat versus many Asian peers.
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