New Delhi [India], October 29 (ANI): Foreign portfolio investor (FPI) outflows from Indian equities are being pushed by three main components, together with the worldwide rush in the direction of synthetic intelligence (AI)-related funding alternatives, rising authorities bond yields in developed economies and comparatively excessive valuations in Indian stock markets, in keeping with Ranen Banerjee, Partner and Leader, Government and Public Sector (GPS), PwC India.
The observations come amid sustained promoting by international buyers, who’ve withdrawn a web Rs 2.96 lakh crore from Indian equities thus far in 2026.
In an unique interview with ANI, Banerjee mentioned that international capital is more and more chasing AI-related funding alternatives, which stay comparatively restricted in India in comparison with different main markets, main buyers to redirect funds in the direction of different geographies.
‘One is that some huge cash is chasing, AI-relevant funding alternatives… since these alternatives are fewer in India in comparison with different geographies, subsequently there’s clearly an attraction for that capital to exit,’ he mentioned.
Highlighting the second issue, Banerjee pointed to rising authorities bond yields throughout main developed economies, that are making investments in these markets extra enticing in comparison with rupee-denominated property.
He famous that yields on 10-year authorities securities have crossed 5 per cent within the United States and the United Kingdom, whereas these in Japan have exceeded 3 per cent.
‘Now, when an investor is getting that sort of a dollar return or a euro return or a pound return or a yen return, then clearly that places strain on a rupee funding as a result of the rupee returns are going to be decrease,’ he mentioned.
On the third issue, Banerjee highlighted that Indian equities have been thought of overvalued, lowering their attractiveness to international buyers.
‘The third facet is that the Indian markets had been thought of overvalued, and subsequently the attractiveness of the shares had been decrease due to the overvaluation,’ he mentioned.
The sustained promoting by international buyers can be mirrored in month-to-month FPI movement knowledge, with March recording the very best outflow of over Rs 1.17 lakh crore, adopted by April at Rs 60,847 crore and June at Rs 49,340 crore.
In October, FPIs withdrew Rs 36,164 crore from Indian equities as of October 28, following outflows of Rs 35,861 crore in September.
However, international buyers recorded web inflows throughout February, July and August, amounting to Rs 22,615 crore, Rs 20,200 crore and Rs 29,631 crore, respectively.
Despite the continued outflows, Banerjee indicated that the extended interval of weak market returns may progressively make Indian equities extra enticing to international buyers as valuations endure correction.
‘Now we all know that two years have handed with nearly unfavorable returns if you happen to have a look at the indices. So that sort of signifies that there’s a correction that’s taking place over this time period. And sooner or later in time, it would begin wanting enticing,’ Banerjee added. (ANI)