A resolution of the West Asia crisis and the peak of the global Artificial Intelligence capex will benefit India, said Candace Browning, head of BofA Global Research. In an interview with Himadri Buch, Browning said Indian equities are expected to lag emerging markets in the near term. Edited excerpts:Global investors appear underweight on India. Are the concerns about India cyclical or structural?For foreign investors, a few triggers matter. A resolution in West Asia would help. Also, once AI capex peaks, India would be seen favourably with diversified and structural growth avenues. Policy reforms, if implemented, could drive foreign investors towards India.What kind of returns are you expecting from India over the next year? Any targets for the Nifty?We expect India to lag larger emerging markets in the near term. Our year-end Nifty target is at 26,200. A prolonged conflict could hurt growth, widen the fiscal and current account deficits, and put the rupee under pressure. If inflation remains higher, there could be policy rate hikes, which weigh on corporate earnings. So, if the conflict continues, I do not see valuations expanding further. On the contrary, there is a risk of further pressure on valuations.What is your outlook for emerging markets, including South Korea and Taiwan?We have been structurally bullish on emerging markets since the beginning of 2025. We believe that North Asia will continue to benefit from the tech story, while LATAM and Africa will benefit from demand for industrial and precious metals.Once the uncertainty around West Asia subsides, emerging markets should benefit from cheaper energy. India is a key beneficiary of this outlook.What is your assessment of the AI investment cycle?The narrative around artificial intelligence (AI) often appears overhyped in the short term, much like prior transformative technologies such as the internet, cloud computing, and mobile broadband. However, history suggests these innovations tend to be underappreciated till their full impact materialises. Overall, we believe, regardless of whether concerns of a bubble emerge, the pace of AI investment and deployment is unlikely to slow over the next 12 to 24 months.With the US seeing inflationary pressures, will it be possible for the US Fed under the new chief, Kevin Wash, to cut rates?We expect the Fed to stay on hold for the rest of the year. Although inflation has increased and economic activity has held up in recent months, it is too early to tell whether the US is headed for stagflation or reflation. Consumer spending has been supported by fiscal stimulus at the start of the year. However, with that tailwind now fading, the true test of consumer and labour market resilience in the face of the ongoing energy shock lies ahead of us.Is the worst over for the rupee?In a strong-dollar environment, we think the Indian rupee is likely to remain under depreciation pressure.What are your views on gold?We think that higher oil prices would likely lead to higher inflation and possibly lower gold prices in the short-term. In the short run, oil and gold become strongly negatively correlated. And a spike or a sharp drop in oil prices would likely have an inverse effect on gold.