Foreign portfolio money is coming back. Not immediately, not uniformly, but it is coming. C.S. Venkatakrishnan, CEO of Barclays Global, told CNBC-TV18 that the current exodus of foreign institutional investors (FPIs) from Indian equities is part of a broader global "rotation trade" rather than a structural rejection of the Indian market. Investors are currently chasing yields in the US, but Venkatakrishnan argues this allocation shift is temporary and will eventually reverse, bringing capital back to emerging markets like India.
But here is the catch. Venkatakrishnan was blunt: do not build your strategy on the return of FPIs. "Domestic investment is the most important thing," he said. The Indian market has to be strong enough to stand on its own two legs. If foreign money leaves for six months, the market shouldn't crumble. It needs to be resilient to short and medium-term fluctuations, fueled by the robust capital formation happening among mid-sized Indian companies.
The macro backdrop supports this resilience. Despite global geopolitical noise and higher oil prices, India’s growth is holding steady at 7.5%. This isn't a fragile economy. It’s weathering the storm while Europe, interestingly, is seeing its own foreign flows weaken. The implication is clear: this is a global reallocation, not an India-specific crisis. Europe is losing favor too. The capital is just moving around the globe, hunting for the best risk-reward ratio, which currently sits in the US.
Barclays is betting on this recovery. The bank is planning to re-enter the Indian equities market after years of absence. Venkatakrishnan admitted that equities had been a "missing part" of their India business, which already covers investment banking, markets, corporate banking, and private banking. Now, they are positioning themselves to help Indian companies access both domestic and global capital pools, betting that the tide will turn. When the FPI money returns, Barclays wants to be there to welcome it, but they aren't waiting for it to start the engine.