India’s stock markets have witnessed an unusual five-year stretch without any net foreign portfolio investment (FPI) inflows—something Akash Prakash, CEO of Amansa Capital, describes as a notably long period. So far in 2025, FPIs have withdrawn nearly $13 billion, bringing foreign ownership in Indian equities to a 15-year low. Global, regional, and emerging market (EM) funds remain underweight on India, classifying it as a “consensus sell.”
This foreign aversion is tied to the broader underperformance of EM equities. Prakash noted that while EMs have lagged global markets, India has stood out—MSCI India has returned nearly 15% in dollars annually over five years, versus 5% for the broader EM index. Yet, this strength has made India a target for profit-taking by global investors managing liquidity issues.
To regain investor trust, India must show it can sustain 7–8% growth. Key reforms and global industry leadership are essential. Slower GDP and modest earnings growth (10% EPS) remain concerns, especially as India misses out on the AI boom. However, strong domestic inflows continue, and any return of foreign investors could drive significant market upside.
