Author: Nishtha Mehrotra | EQMint

A correction in AI-related valuations in advanced economies could potentially bring more capital into India, Reserve Bank of India (RBI) Governor Sanjay Malhotra said at the fifth Kautilya Economic Conclave in New Delhi.

Malhotra said the AI investment cycle has been a major support for global financial markets, but a slowdown in AI investment or earnings could trigger a sharp repricing of financial assets, particularly across the AI value chain.

For India, however, such a correction could create a positive spillover if global investors redirect capital towards emerging markets. Malhotra noted that Indian equity markets have already corrected from elevated valuations, although the adjustment has remained orderly.

The RBI Governor also flagged stretched AI valuations as one of five emerging risks to global financial stability, alongside elevated global debt, leverage in non-bank finance, private credit and cyber risks linked to AI.

He said India is navigating global uncertainty from a position of strength, supported by strong macroeconomic fundamentals and a resilient financial system.

Disclaimer: This article is for information purposes only and is not investment advice.

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