FPIs have already withdrawn Rs 2.6 trillion from Indian equities in 2026, exceeding the outflows recorded in any previous full calendar year.
'FPIs are unlikely to return unless there is equilibrium between valuation premium and earnings growth.'
Domestic equities surged on Tuesday, posting their best single-day gains in more than eight months after a long-awaited trade deal between India and the US. The deal, which lowered tariffs on Indian goods to 18 per cent from 50 per cent, significantly improved investor sentiment and lifted a key overhang for the market.
After a year of modest returns, equity investors may anticipate gains of 10-15 per cent in Samvat 2082, which began on October 21. Although valuations have moderated from their peaks a year earlier, they remain above long-term averages, potentially limiting sharp upsides.
Foreign portfolio investors sold stocks worth Rs 1.42 trillion in 2025, with their sales hitting Rs 12,257 crore in the first four trading days of September.
Market experts said the premiums were down from around 15 per cent before the Union Budget last week to 5-7 per cent at present. Long-only FIIs allocate funds for each market, which entails a certain premium, based on growth projections for the year.
'More than investors, fund houses, and advisors have raised caution and limited flows on small-and mid-caps.'
'It is unlikely that foreign portfolio investors (FPIs) might increase their India allocation, given the overweight status for most FPIs.' 'Given the commentary from the Republican Party, an anti-imports approach means money will not flow out of the US.'
Premiumisation, improving demand aid realisation growth at most large firms
These consistent performers are expected to maintain momentum.
Thinning valuation gap between these and mid-caps indicates a shift in investors' preferences.
While gold returned 12 per cent annual gain in 10 years, Nifty didn't exceed 9 per cent.
While larger companies like Nestle India, Britannia and the like are often mentioned, some mid-cap companies are also expected to grow at a rapid clip.
