Exclusive | Is the India story over for FIIs? BofA says investors don't want to miss what's next

Foreign Institutional Investors (FIIs) are recalibrating their portfolios, driving India's global equity market capitalization ranking down to seventh, as capital flows aggressively pivot towards AI-driven opportunities in Taiwan and South Korea. This dramatic shift reflects a global chase for immediate high-growth tech plays, yet Bank of America (BofA) analysts contend that smart money is quietly positioning for India's inevitable resurgence. The exodus from India isn't a crisis but a strategic rebalancing. The explosive demand for advanced semiconductor manufacturing, driven by the generative AI boom, has cemented Taiwan and South Korea's indispensable roles, particularly through giants like Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics. These market leaders are currently seeing unprecedented capital inflows, drawing funds from other Emerging Markets (EMs) perceived as having less immediate tech upside. This trend underscores the brutal efficiency with which global capital chases the next big wave, even at the expense of established narratives. Looking ahead, BofA advises against missing India's long-term potential, citing its robust domestic consumption, ongoing infrastructure blitz, and the transformative impact of its Digital Public Infrastructure (DPI) initiatives. While current tech valuations in Asia's chip hubs remain elevated, investors are watching for signs of India's homegrown tech and manufacturing sectors gaining traction, potentially fueled by policy reforms or a cooling of the global AI hardware frenzy. The question isn't if India will reclaim its luster, but when, and who will be ready.