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Foreign funds poised to return to Indian equities as valuation gap narrows
Foreign investors may resume buying Indian equities as valuations improve and earnings outlook stabilises.
After approximately ₹2 lakh crore of foreign-portfolio-investor outflows in 2025, Indian stock markets are signalling a potential return of foreign capital. According to a report by Elara Capital, India’s resilient macroeconomic backdrop, moderating valuations and stabilising earnings revisions are drawing renewed investor interest. Mid-cap stocks, in particular, are seen as beneficiaries of this shift. Analysts emphasise that sustained fund flows will depend on earnings momentum and global risk appetite.