Amundi manages $2.67 trillion in assets. | Photo credit: PHILIPPE WOJAZER
Foreign investors have sold $16.4 billion of Indian equities so far this year, marking the second-largest outflow on record, even as domestic institutional buyers stepped in with $77 billion in purchases.
The outflows, driven by soft nominal growth, subdued profits, high US rates and high valuations, saw Indian equities lag broader emerging market benchmarks for the first time in five years.
India’s benchmark index Nifty 50 is up 10.8 percent so far in 2025 and is within 0.5 percent of last year’s record high, but lags behind a 24 percent rise in the MSCI Asia-Pacific ex-Japan index and a 16 percent rise in China’s Shanghai Composite.
With valuations approaching the neutral zone and domestic demand strong, the conditions for a recovery in foreign flows are falling into place, said Alessia Berardi, head of emerging macro strategy at the Amundi Investment Institute. The Paris-based company manages $2.67 trillion in assets.
“Real GDP was strong in April-June, but nominal growth was only in the high single digits, which is weak for India, where growth is typically above 10 percent,” Berardi said.
Growth should normalize in coming quarters as corporate profits improve, she said.
“India will continue to outperform even in the medium term. We recommend increasing the structural allocation to overweight Indian equities,” she said, citing India as one of Amundi’s top picks for emerging markets.
Amundi remains “somewhat positive” on Indian and broader emerging markets equities in the first half of 2026, while taking a “neutral” stance on China, Japan and US equities.
India as a hedge against global volatility
Berardi said Indian equities provide useful hedge in a volatile global context, supported by the economy’s heavy dependence on domestic demand rather than exports.
High U.S. tariffs are not “really a problem,” she added.
India’s limited exposure to global trade tensions and US tariffs provides a cushion for investors, with consensus expectations still pointing to possible tariff cuts later this year.
Recent policy moves to boost consumption, including expectations around the next planned cycle of central government wage revisions in India, further support the outlook.
Despite a rally in China, India is increasingly seen as a diversification and middle-power growth country with stronger medium-term prospects, Berardi said.
Published on November 21, 2025
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