Foreign investors reassess India's premium as outflows accelerate. Foreign portfolio investors have pulled nearly $28 billion from Indian equities between September 2024 and November 2025, pushing foreign ownership to a 14-year low. Year-to-date, FIIs have offloaded $1.79 trillion worth of shares, with April alone seeing $48.2 billion in sales. The shift reflects more than cyclical pressures like elevated US yields and geopolitical risks. Investors now view India as expensive relative to alternatives like Japan, Taiwan, and South Korea. The structural concern centers on whether earnings growth can justify current valuations. India's weighting in the MSCI Emerging Markets Index has slipped from second to fourth position, triggering passive outflows.
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