Why foreign investors are shunning Indian stocks this year
Foreign investors have pulled $12.8 billion out of Indian stocks so far this year, mostly because earnings growth here has slowed and other Asian markets are looking more promising.
Even though India's economy is steady, high stock prices and weak profit growth are making global investors think twice.
Foreigners are finding better returns elsewhere
India's stock market is priced much higher than most emerging markets—trading at a P/E ratio of 19.4 versus the MSCI Emerging Markets average of 12.6—even though Nifty earnings grew just 4% in dollar terms.
Meanwhile, places like South Korea and Taiwan are delivering much faster earnings growth, so foreign money is flowing there instead.
What could bring FIIs back to India?
Analysts say FIIs would want to see stronger profit growth—about 12-14% in US dollars—to come back to India, especially from sectors like Financials, Staples, Discretionary, and Infrastructure.
Other possible triggers include RBI rate cuts, tax reforms, better rural demand after good monsoons, a thaw in US-India trade tensions, oil price decline, and a liquidity push.