Zerodha founder and CEO Nithin Kamath has said foreign investor interest in India has “pretty much died out,” citing a mix of global risk worries, expensive valuations and domestic policy concerns for the pullback.
In a LinkedIn post, Kamath said India is being seen as geopolitically exposed, especially to an oil shock, while the lack of strong AI-linked plays and a weak rupee are also weighing on the sentiment.
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The comments come at a time when Foreign Portfolio Investors (FPIs) have sold Indian equities worth Rs 1.77 lakh crore in 2026 so far, including a massive sell-off of nearly Rs 1.2 lakh crore in March alone, making it one of the sharpest foreign exits from Indian markets in recent memory.
Kamath said he had asked an industry participant about foreign allocations to India. "The TLDR: Interest has pretty much died out. India is seen as geopolitically exposed, especially to an oil shock. There are no real AI plays. Valuations are rich. And the rupee situation doesn't help," he wrote in a post on LinkedIn.
'Interest Has Pretty Much Died': Nithin Kamath Links FPIs Exit To Oil Shock, No Real AI Plays, Rich Valuations
He also pointed out that investors who were sitting on profits have already moved on. "Investors who were sitting on gains have taken money off the table and are now looking at markets like Japan, Taiwan, Korea, Europe etc instead," he said.
India's vulnerability to an oil shock is a real concern. India imports about 88% of its oil requirements, with a significant share passing through the Strait of Hormuz, a waterway that has been at the centre of the US-Iran conflict in recent weeks.
On domestic policy, Kamath was pointed. He flagged the capital gains tax structure as a deterrent, "Our LTCG/STCG structure and the increase in STT have made India less attractive compared to other markets that are seeing inflows." Finance Minister Nirmala Sitharaman had raised the long-term capital gains tax on equities from 10% to 12.5% in the 2024 Union Budget, a move that has drawn criticism from several market veterans.
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Kamath said fixing these issues was the obvious first step: "If we need to attract FPIs back, and we do, fixing this feels like pretty low-hanging fruit."
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