Amundi manages $2.67 trillion in assets. | Photo Credit: PHILIPPE WOJAZER
Foreign investors have sold $16.4 billion of Indian shares so far this year, marking their second-largest outflow on record, even as domestic institutional buyers stepped in with $77 billion of purchases.
The outflows, driven by soft nominal growth, moderate earnings, steep US tariffs, and high valuations left Indian equities trailing broader emerging-market benchmarks for the first time in five years.
India’s benchmark index Nifty 50 has risen 10.8 per cent so far in 2025 and is within 0.5 per cent of last year’s record high, but it has lagged behind a 24 per cent gain in MSCI’s Asia-Pacific ex-Japan index and a 16 per cent rise in China’s Shanghai Composite.
With valuations nearing neutral zone and domestic demand strong, conditions for a rebound in foreign flows are falling into place, said Alessia Berardi, head of emerging macro strategy at Amundi Investment Institute. The Paris-based firm 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 it’s typically above 10 per cent,” Berardi said.
Growth should normalise in the coming quarters as corporate earnings improve, she said.
“India will continue to outperform even in the medium term. We recommend increasing structural allocation to overweight Indian equities,” she said, citing India as one of Amundi’s top emerging market picks.
Amundi remains “slightly positive” on Indian and broader emerging market equities for the first half of 2026, while it holds a “neutral” stance on China, Japan, and US equities.
India as a hedge against global volatility
Berardi said Indian equities offer a useful hedge in a volatile global backdrop, supported by the economy’s heavy reliance on domestic demand rather than exports.
High US tariffs are not “really a concern”, she added.
India’s limited exposure to global trade tensions and US tariffs provides a buffer for investors, with consensus expectations still pointing to potential tariff reductions later this year.
Recent policy steps to spur consumption, including expectations around the next scheduled central government pay revision cycle in India, further support the outlook.
Despite a rally in China, India is increasingly viewed as a diversifier and middle-power growth story with stronger medium-term prospects, Berardi said.
Published on November 21, 2025
