India Investing:From ‘T I N A’ to ‘A N T I’
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Foreign Investor sentiment seems to have moved from ‘TINA’ - There Is No Alternative to being ANTI India
India Investing: ‘T I N A’ to ‘A N T I’
The Indian public equity markets peaked in September 2024. Since then, foreign investors have sold USD 51 billion till April 2026. The market value of foreign investor holding in Indian equities has fallen from USD 930 billion in September 2024 to USD 670 billion, a ~30% drop as at the end of March 2026.
Graph 1:Are Foreign Investors ‘ANTI’ India?
(Source: NSDL FPI Monitor, January 2018 to April 2026; Market Value of Ownership data till March 2026).
This historical data is only for representation and understanding purposes.
This seems to be a dramatic shift in sentiment towards India investing.
Within emerging markets, over the last 10 years, India was the favored investment destination. Many regarded India then as ‘TINA’ – There Is No Alternative (but to invest in India). 1
India was also hyped up as ‘China+1’. The ‘China+1’ theme found limited success in trade and manufacturing. However, India was a large beneficiary of the ‘China is uninvestable’ theme and saw large global capital inflows into private equity and venture capital.2
From there to a situation now where foreign investors seem ‘indifferent’ to the allure of the India markets.
Foreign investors seem to be ‘ANTI’ India given the pace of selling and exits from Indian markets.
Foreign ownership of the Indian equity markets is now down to its lowest level since 2012. India’s weight in the MSCI Emerging Markets and MSCI ACWI (All country world indices) has fallen by >30% since the peak of September 2024.3
Graph 2:India’s weight in global equity indices fall, India is even more under invested in global portfolios
(Source for top left chart and bottom right: India’s weight in MSCI All country World Index (ACWI) and India’s weight in Global Emerging Market (GEM) Funds - Morgan Stanley Research, India Equity Strategy, April 2026)
(Source for top right chart: India’s weight in MSCI (Emerging Market) EM Index – Jefferies Research, April 2026)
(Source for bottom left: India Equity Ownership (% of marketcap) – CLSA Research, April 2026)
Past performance does not guarantee future return. This is only for representation and understanding purpose and should not be construed as a recommendation to invest.
A combination of weak currency, poor taxation structure on investments relative to other Emerging markets plus lack of AI play in India seem to have influenced foreign investor to sell India. 4
However, as we wrote in Simple Story getting Complicated , a large part of India’s relative underperformance can be explained by the fact that in recent times, India’s nominal GDP growth and earnings trajectory has been below its long-term average.
Graph 3:India’s simple story of double-digit nominal GDP and earnings growth got complicated
(Source: Bloomberg Finance L.P; Quarterly %yoy GDP data as of December 2025, BSE-30 Sensex Index, EPS = 1 year
forward Earnings Per Share- data till March 2026); Past performance is not indicative of future return
India Investing Story is a Growth Story
India commands a premium to Emerging markets predominantly due to its superior earnings profile and corporate return ratios. In the current cycle, that expectation is getting belied. Hence, we are witnessing a compression in the relative valuation of India over other emerging markets (see charts below). In our view, as India’s growth slows down and relative opportunities seem to be more promising, global investors who allocate to India from their global or emerging market funds seem to be taking capital away from India thus leading to capital outflows as shown above.
Is the Growth and Earnings Cycle changing?
Strong earnings, ahead of consensus expectations, are being reported by companies for March ended fiscal year 2026, especially those exposed to domestic consumption. However, the earnings reflected a limited pass-through of the escalating costs due to West Asia conflict and hence some managements have called out future input cost inflation due to rise in key commodity prices and supply chain disruptions in sectors such as autos, cement, agro-chemicals, and capital goods. The consensus earnings growth expectation of 16% for fiscal year ending March 2027 is therefore at risk.6
Graph 4:Robust trends in Sales and earnings growth
Source: Bloomberg, Capitaline; Note: BSE 500 data ex financials services, data for Q4FY26 based on results so far
for 147 companies as per data available at the time of making this chart. (PAT = Profit after Tax)
The graph is only for representation and understanding purpose and does not assure any promise or guarantee
that the historical results are indicative of future results.
India’s subdued market performance, its large under-performance to Emerging Market Index and the recent pick-up in earnings has resulted in India’s valuation in absolute and relative terms to trade at around its long-term average at somewhat attractive levels. 7
Graph 5: Index PE bouncing near long term average
Source Graph 5: Bloomberg Finance L.P, Data as of April 30, 2026. PE = Price to Earnings Ratio. Past performance is not an indicator of future result.
Graph 6: and valuations are attractive on a relative basis
Source Graph 6: Morgan Stanley Research, PB = Price to Book Ratio. Past performance is not an indicator of future result.
Prime Ministers’ Guided Message
As the Prime Minister, Narendra Modi, exhorts the nation to postpone gold purchases, moderate fuel consumption, adopt natural farming, reduce edible oil in cooking, and to avoid foreign vacations, it is natural to feel anxious and concerned about the state of the economy.8
The conflict in Middle East has continued for longer than expected. As we wrote in West Asia Conflict will delay Foreign Investor allocation, India faces idiosyncratic risks from the conflict which can complicate India's near-term macro situation.
The immediate worry though within the government seems to be stemming from the depreciation of the Indian Rupee. The solution to that is to augment capital flows, something which India has struggled to receive in the past 18 months
The concerns on the economy have increased in the last two months. With the prospect of EL-NINO, India farm and rural incomes may also get impacted if monsoon indeed remains poor.9 India must hope and pray that the conflict ceases soon and brings in relief on key commodity supply at softer prices.
IIn our view, Indian stock market valuations appear attractive and given the under-allocated foreign investor positioning, a reversal in sentiment and some positive inflows remains a possibility. However, given the enhanced macro risks, it will be prudent to be cautious and gradually scale the India allocation.
Sources and Footnotes
- Source: Hindu Business Line, India enjoying the ‘There is no alternative factor’ – August 2022
- Source: McKinsey, India’s Private Markets: The Global LP view, March 2026
- Source: Morgan Stanley research, India Equity Strategy, April 2026
- Source: Hindu Business Line, May 2026
- Source: HSBC Global Investment Research, India Strategy Note, August 2025
- Source: Bloomberg Finance L.P.
- Source: CLSA, Greed and Fear, May 2026
- Source: BBC PM Modi urges Indians.. 11 May 2026
- Source: Reuters, How EL Nino-driven weaker rains could impact India
Glossary
- MSCI:Morgan Stanley Capital International. They create global equity indices
- ACWI:All Country World Index as created by MSCI to represent world equity markets
- EM:Emerging Markets Index as created by MSCI to represent emerging market equity markets
- GEM:Global Emerging Market – Funds which invest in Global Emerging Markets
- EPS:Earnings Per Share of the companies in the BSE-30 Sensex Index
- PER:Share Price to Earnings per share ratio of the BSE-30 Sensex Index
- PB:Shar Price to Book Value ratio of the MSCI India Index relative to MSCI EM Index
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