Team Nevesh | July 2026
Quant investing has long remained on the fringes of India’s mutual fund industry. While investors have traditionally placed their faith in experienced fund managers and fundamental research, advances in artificial intelligence, machine learning and data analytics are beginning to reshape that conversation.
Industry leaders believe quantitative investing is no longer just an experiment. As Indian markets become deeper and more data-driven, quant-based mutual funds could gradually move from being a niche category to a more mainstream investment strategy. Even so, they caution that algorithms alone are unlikely to replace human judgement anytime soon.
India’s markets still offer opportunities for quant models
For Bhautik Ambani, CEO of AlphaGrep, India’s market structure gives quantitative investing an edge.
He argues that compared with developed markets such as the US, Indian markets continue to exhibit behavioural biases, information gaps and higher retail participation. Those characteristics create inefficiencies that systematic investment models are designed to identify.
Ambani believes India is following a path that developed markets took years ago.
Passive investing, one of the earliest forms of systematic investing, started as a small segment in the US before becoming a dominant force. He expects India could witness a similar transition as investors become more comfortable with data-driven investing.
He also believes technology is steadily becoming the differentiator.
“Everyone now has access to information almost instantly. The advantage increasingly comes from processing that information faster, more consistently and without behavioural bias,” he said.
Even so, Ambani does not see technology replacing experienced investment professionals.
“The future isn’t humans versus machines. The strongest investment process will combine quantitative models with economic understanding and research judgement.”
Data may improve investing, but markets remain driven by people
Anand Radhakrishnan, Managing Director and CEO of Sundaram Mutual Fund, believes quantitative investing is well suited to a market as diverse as India.
Different investment styles outperform during different phases of the market cycle, and quantitative models that adapt to changing conditions could attract greater investor interest over time.
He, however, believes numbers tell only part of the story.
“Markets are only half data. The other half is sentiment, behaviour and several qualitative factors that are difficult for any model to capture.”
Looking at developed markets, Radhakrishnan says the biggest lesson from the US is not superior returns but continuous experimentation. Different quantitative approaches have been tested over decades, allowing the industry to identify which strategies remain effective across changing market cycles.
Performance will depend on market conditions
According to Ankit Garg, Head of Equity Investments at Wealthy Nivesh, quant investing has significant room to grow in India, particularly because the domestic market has historically been dominated by fundamental investing.
However, he believes investors often misunderstand how these strategies work.
Momentum and factor-based models typically perform well during strong trending markets, but can struggle when markets become volatile or move sideways.
The sharp rally seen during 2023 and 2024 benefited many momentum-driven strategies, while recent market volatility has highlighted that no investment approach consistently outperforms across every market environment.
AI could accelerate adoption
For Varun Gupta, CEO of Groww AMC, artificial intelligence could become one of the biggest catalysts for quant investing over the next decade.
Indian markets today generate significantly more data than they did a few years ago. Combined with stronger computing power, that creates opportunities for quantitative models to identify investment patterns that may be difficult for humans to consistently detect.
Gupta believes quantitative investing will influence far more than stock selection.
Portfolio construction, portfolio rebalancing, risk management and trade execution are all likely to become increasingly data-driven as technology evolves.
He also believes Indian asset management companies should reconsider their approach towards quant investing.
“For years, quant investing remained a niche offering. With AI advancing rapidly, fund houses that invest in research and innovation today could be better positioned over the coming years.”
Not a replacement for active investing
Despite growing optimism, none of the industry experts believes quant investing will replace traditional active fund management.
Instead, they see the two approaches becoming increasingly complementary.
Algorithms can remove emotional bias, process enormous amounts of information and maintain discipline. Human fund managers, meanwhile, continue to provide context, judgement and an understanding of market behaviour that cannot always be captured through historical data.
That balance may ultimately determine how the category evolves.
The road ahead
Quant mutual funds still account for a small share of India’s mutual fund industry. Yet the conversation around them has changed noticeably.
As AI becomes more sophisticated, computing costs fall, and financial data expands, systematic investing is likely to play a bigger role in portfolio management than it does today.
For investors, however, one point remains unchanged. Quant funds are an investment style, not a guarantee of superior returns. Like every other strategy, they will go through periods of outperformance and underperformance.
The real test will not be whether algorithms beat humans, but whether technology and human judgement can work together to build stronger investment processes as India’s capital markets continue to mature.