FIIs have been unimpressed with Indian markets for almost five years. India didn’t feed into the high growth AI themes that dominated global portfolios in 2025. India became expensive as its corporate earnings and margin expansion story lost momentum. India was also an easy market to exit with domestic investors offering liquidity.
But, the India story has changed: and it’s not the demographic hype of a young working population. The ground reality is that despite the tariff tantrum going on with the US, the Indian economy has continued to grow. Liquidity moved from deficit to surplus in the last year, the cost of borrowing has come down, and both banks and corporates have cash on their balance sheets. Tax reforms from the Budget and GST rationalisation will boost consumption in the coming quarters. Inflation is lowering its head with food in the deflationary zone and oil prices remaining stable. Large cap earnings have silently improved and are showing signs of resilience and stability.
The gradual and uneven turnaround in corporate India’s earnings has gone unnoticed as markets moved sideways in the last year. While FIIs are not outright buyers, selling has moderated significantly in October and November.
While India may not be destination AI, it has more to offer now than before. After all, consumption is reviving, inflation is benign, and growth is on track. This seems to be a tall ask from other global investment destinations.