Foreign institutional investors (FIIs) have largely stayed away from Indian equities this year, despite a strong rally across other emerging markets. Sridhar Sivaram, Investment Director at Enam Holdings, says the combination of high valuations and muted earnings growth has made India less attractive compared to peers.
“If you have 7–8% earnings growth and your market PE is 22, while Brazil, China, Korea, and Taiwan offer far better earnings growth at much cheaper valuations, it's obvious where the money flows,” Sivaram explained.
He pointed out that Korea is up 60–70%, China 40%, and Latin America 30–40%, while India has remained flat in dollar terms. “It's a very rare year where the average emerging market is up at least 30–40%, and we are flat. This does not happen often,” he added.
In the first week of December alone, foreign investors continued their sell-off spree, offloading equities worth R 11,820 crore. For 2025, cumulative FII outflows have gone above Rs 1.5 lakh crore, as cautious sentiment and global headwinds keep pressure on domestic market markets
