NEW DELHI: Artificial intelligence (AI) valuations have reached elevated levels and further rallies from here run the risk of a bubble burst, and this realisation is dawning on investors widely now, according to market watchers.

This may restrain sustained FII selling in India. If, along with this realisation, India’s earnings growth continues to improve, FIIs are likely to turn buyers. But this may take time, they noted.

“It is important to understand a significant feature of the FII activity this year. FIIs, particularly the hedge funds, are selling in India and buying in other markets which are driven by AI trade,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.

The US, China, South Korea and Taiwan are regarded as AI winners. This perception is hugely

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