Should I stop my India SIPs and move Rs 10L to US tech funds to catch the AI rally?

Diversifying globally is smart but chasing a narrow AI rally while abandoning Indian equities ignores the massive valuation catch-up that makes India highly attractive right now.

It is completely natural to feel the fear of missing out when you see global markets dominated by a massive AI tech rally. Diversifying into international funds is a sound strategy provided it is part of a structured plan rather than a tactical gamble. But pausing your domestic SIPs to chase hot global trends is usually a mistake.

Let us look at the valuation reality between the two markets. Last year India actually underperformed several global markets which narrowed its historical valuation premium. In late 2022 both India and the NASDAQ traded at a Price-to-Earnings multiple of around 22 to 24.

Today India remains in that reasonable range while the NASDAQ has expanded significantly. This makes Indian large caps highly attractive on a relative basis especially when anchored to our strong domestic GDP growth. Regarding the AI cycle it is important to remember how these massive thematic rallies play out.

As with any major cycle the initial rally is very broad-based and lifts everything associated with the theme. Over time the market will segregate the real value creators from the rest of the pack. The AI trade is definitely not over but it will eventually narrow toward companies demonstrating tangible success and actual cash flows.

Meanwhile India has structural tailwinds like improved RBI liquidity management and the cumulative impact of corporate tax cuts and GST rationalization. Keep your Rs 10L deployed according to your predefined asset allocation and do not try to time geopolitical events or global tech cycles.

Disclaimer: All information shared above are strictly for educational and informational purposes only. It should not be construed as financial or investment advice.