FPI outflows from Indian equities surged to $26 billion this year, eclipsing the prior record and signaling a sharp shift in global investor sentiment. According to NSDL data, $1.7 billion was sold in September alone, a steep uptick after a brief respite in July and August.
Nifty 50 companies reported average earnings growth of 11% in the June quarter, starkly lower than the 31% surge seen by mid‑cap firms. The muted performance underscores the sector‑wide challenge of translating macro growth into corporate profitability.
Bernstein analysts warned that many large Indian firms are “locked in a bygone economic era,” explaining that their lack of investment in emerging tech like EVs and semiconductors hampers their ability to justify lofty valuations. The commentary highlights a growing mismatch between market expectations and corporate strategy.
Vishal Kampani, vice‑chairman of JM Financial, attributed the outflows to higher U.S. bond yields and noted that valuations in parts of the market have “run ahead of themselves.” He forecast a reversal over the next few years, citing renewed interest from Europe and North Asia.
Reliance Industries and Mahindra & Mahindra remain outliers, blending scale with exposure to digital services, new energy, and EVs. Their diversified footprints make them attractive to institutional investors even as the broader large‑cap landscape falters.
Reform momentum is expected to continue, with the government pushing for deeper market access and regulatory clarity. Upcoming earnings releases and policy announcements will likely shape the next phase of investor confidence, but the current outflow trend suggests caution remains ahead.