“India is facing earnings downgrades, while other AI-driven markets are seeing upgrades,” India research head Amish Shah said. Global investors are unlikely to return to India “before 2027 or perhaps even 2028. It definitely does not look like a 2026 event.”Local stocks are among the worst performers globally so far in 2026, with a weakening rupee worsening a record $23 billion foreign selloff as global investors continue to chase AI-linked plays elsewhere in Asia. Without a meaningful expansion in earnings growth, India’s premium valuations may remain under pressure. BloombergBofA retained its forecast of about 8.5% earnings growth for NSE Nifty 50 Index companies in the financial year that ends in March 2027. The brokerage estimates earnings growth for the current fiscal year at around 7%.“So essentially, we are looking at low growth on a low base for India,” Shah said. “In contrast, South Korea and Taiwan are delivering high earnings growth.”Meanwhile, relative valuations for Nifty 50 remain expensive despite this year’s 9% drop. The gauge trades at around 18 times its one-year forward earnings. That compares with 7.5 times for the benchmark in Korea — the world’s best-performing stock market this year.Shah’s comments follow his recent forecast of stagflation risks rising for India, mainly hit by a prolonged war in Iran given the country’s dependence on energy imports. He also warned that rupee depreciation remains a structural challenge for the country.“Foreign flows are going to depend on when the West Asia conflict comes to an end and when the AI capex cycle peaks out,” Shah said. Until then, domestic money is likely to keep chasing Indian mid- and small-cap stocks, he said.