Arvind Chari Sees India's Relative Valuations To Drive Back FIIs Flows — Here's Why Chari Positive On India

Q India's Chief Investment Officer Arvind Chari said that relative valuations of India among emerging-market economies will influence the foreign fund inflows. He also reiterated his constructive view of India's macroeconomic recovery during an interview with NDTV Profit.

Since September, 2024, India has seen outflow of around $25 billion, he said. As a percentage of market value, it is not that much. Around 80% of the foreign institutional portfolio flows comes from global emerging market allocation, Asia allocation or global allocation but not from India alone.

India has been relative to other countries for FIIs. The country has been an Overweight in an active global emerging market portfolio. India's weight has gone up to 20% from 8% in the MSCI-EM index 15 years ago. Now, it got corrected form 23–24%, Chari explained. Relative valuations will likely influence the foreign fund flows.

For the first time you, India is Underweight in global emerging markets. Investors can argue that India's nominal growth, earnings, and valuation have come down a lot, he said.

India was not the beneficiary of artificial intelligence-led rally till September 2025. The money moved to the countries which have advanced technology and chips. Now, AI is being regarded as a possible bubble, India might emerge as beneficiary as it has minimal link to AI-led rally, he said.

Investors may find companies which have good return ratios over cycles and available at a decent price. Those aspects are coming into play, he said.

Q  India has been reasonably constructive on India's macro recovery. Market participants should keep an eye for de-regulation commissions, whose suggestions are being implemented, he said.

For example, quality control orders were remove which was one of the suggestions from the de-regulation committee. The labour codes were supposedly mentioned, and it already got notified; he said. 

The Government may have realised that the nominal growth is not much higher; they need to do second-generation and third-generation reforms to take the real GDP growth higher to 6.5–6.7%, he said.