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India's AI Bet: Domestic Funds Buy As Foreigners Exit
5 Jul
Summary
- Domestic funds increased stakes in AI infrastructure firms like Cyient and Persistent.
- Cyient designs advanced AI chips and software, while Persistent builds enterprise AI solutions.
- Both stocks saw significant price drops, attracting DIIs betting on an AI turnaround.
Domestic institutional investors (DIIs) are strategically increasing their stakes in select Indian technology companies building the core infrastructure for the AI economy. This is happening while foreign investors have been reducing their exposure. Two prominent companies attracting this domestic buying are Cyient and Persistent Systems, both of which have seen recent share price corrections.
Cyient, based in Hyderabad, is an engineering firm involved in designing advanced semiconductors for AI and developing its own generative AI tools. Despite a soft FY26 with falling profits, DIIs have raised their stake from 27% to 41% over the last two years, absorbing foreign investor sales. The company's stock is down 64% from its all-time high.
Persistent Systems, headquartered in Pune, is a software services company focused on enterprise AI solutions. It has demonstrated strong revenue and profit growth, with sales tripling in five years. Despite a 30% correction from its all-time high and the risk associated with its 1.27 billion euro acquisition of Nagarro, DIIs have shown gentle accumulation.
These investments highlight a belief in the long-term AI build-out, with Cyient representing a potential turnaround in hardware and engineering, and Persistent Systems offering proven growth in software services. Investors are weighing the recovery promise of Cyient against the premium valuation and acquisition risk of Persistent Systems.
