Indian AI proxy stocks outperform as infrastructure bets lift select shares

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Indian AI infrastructure rally

Highlights

Half of the top 10 gainers on India's Nifty 500 in 2026 are AI infrastructure-related, with Sterlite Technologies surging 804% and others like HFCL, MTAR Technologies, Syrma SGS, and TD Power Systems rising 123%-287%.
Despite a 13% decline in India's Nifty 50 and record $32.52 billion foreign outflows in 2026, foreign investors increased stakes in the top 10 AI-linked gainers to 13.6%, and mutual funds to 11.8% by June quarter.
JLL forecasts India's data-centre capacity to grow from 1.6 GW in mid-2026 to 6 GW by 2029, driven by over $50 billion in hyperscaler commitments and major supply contracts such as HFCL's $1.1 billion and Sterlite's $2 billion deals.

AI infrastructure names lead gains in India

As reported by Reuters, half of the top 10 gainers on India's broader Nifty 500 index in 2026 are linked indirectly to the AI buildout, underscoring demand for companies supplying power, connectivity and data-centre equipment.

India's benchmark Nifty 50 index has fallen 13% in 2026, putting it on track for its worst year since 2011, while MSCI's emerging markets index has gained more than 18% so far this year. Investors are instead focusing on a narrow group of stocks seen as "picks and shovels" beneficiaries of the global AI boom.

Rita Tahilramani, investment director of Asian equities at Aberdeen Investments, said AI requires major physical infrastructure, including electricity, transmission equipment, fibre connectivity, cooling and data centres. She said Indian companies are increasingly participating in those opportunities.

Sterlite Technologies has surged 804% this year, making it the top performer on the Nifty 500. Nomura analysts said last week that robust data-centre additions and constrained supply are driving a supercycle in optical fibre cable demand. Other major gainers include HFCL, MTAR Technologies, Syrma SGS and TD Power Systems, which have risen between 123% and 287% in 2026.

Foreign flows, capacity expansion and valuation risks

Naomi Waistell, fund manager at Carmignac, said the scale of the share-price moves partly reflects the scarcity value of such exposure in India, where there are relatively few direct listed AI beneficiaries. Unlike South Korea and Taiwan, India lacks listed chipmakers such as TSMC or Samsung that are central to frontier AI development.

That gap, together with valuation concerns, has contributed to record foreign selling of $32.52 billion in Indian equities this year. Even so, companies tied to data centres, fibre networks and power infrastructure, including APAR Industries, Finolex Cables and Azad Engineering, have bucked the broader trend. Exchange data showed foreign investors raised their stake in the Nifty 500's top 10 AI-linked gainers to 13.6% at the end of the June quarter from 10.3% last year, while mutual funds increased their holdings to 11.8% from 11.5%, according to primeinfobase.com.

Power-related companies are also benefiting as investors factor in the energy demands of AI, with CG Power and Adani Power among the strongest gainers on the Nifty Infrastructure index this year. Swagatam Biswas, head of public equities at Avendus Wealth Management, said investors can build in higher power generation and consumption estimates and back producers and transmission companies.

JLL estimates India's data-centre capacity could nearly quadruple from 1.6 GW in mid-2026 to 6 GW by 2029, with global hyperscalers committing more than $50 billion to build 1.4 GW of capacity in the country by then. Indian suppliers are increasingly securing large orders, including HFCL's five-year contract worth up to $1.1 billion in March, Sterlite's supply agreements worth more than $2 billion combined this year, and Black Box's $131 million order from a U.S.-based hyperscaler. Gaurav Narain, principal adviser to India Capital Growth Fund, said high valuations remain the main risk if current AI spending growth slows.

Our earlier coverage of CoreWeave’s funding strategy explained how the AI infrastructure boom is increasingly being financed through debt markets, including chip-backed loans and structures tied to long-term data-centre capacity. We noted the company’s push to broaden investor access—potentially tapping insurers’ capital—while highlighting the balance-sheet and cash-flow risks that can accompany rapid expansion.

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