Even as Indian equities trade at lower valuations following a massive selloff, global fund managers are in no hurry to invest, citing economic slowdowns, profit downgrades, and potential tariff threats from US President Donald Trump.

A report released on Friday by market analysts from The Economic Times and Bloomberg Intelligence revealed that Foreign Institutional Investors (FIIs) have pulled out nearly $15 billion (₹1,37,354 crore) from Indian markets in 2025. The outflows have weighed heavily on investor sentiment, causing the NSE Nifty 50 Index to decline by 14% from its peak, while small-cap stocks remain in bear market territory.

Why Are Global Investors Hesitant?

Slowing Economic Growth:

• India’s economy is projected to grow at a four-year low of 6.5% in the current fiscal year.
• This is significantly below the nearly 9% average growth recorded over the past three years.

Profit Downgrades & Weak Corporate Earnings:

• Over 60% of Nifty 50 companies have seen downward revisions in profit estimates.
• Investors want clear signs of corporate earnings recovery before committing fresh funds.

Shifting Investor Sentiment Towards China:

• Asian investors are turning to Chinese equities, driven by a bull run in AI-related stocks.

Geopolitical Risks & US Tariff Threats:

• Trump’s potential reciprocal tariffs on Indian goods have added further uncertainty to the market.

Market Experts Weigh In

Anand Gupta, Allianz Global Investors (Singapore):
"Global investors need to see sustained economic recovery and strong corporate earnings before considering India."

Mark Mobius, Veteran Emerging-Market Investor:
"There are no clear signs of bottoming, but this is a great time to look for bargains. The Indian market will eventually recover."

Rajeev Thakkar, CIO, PPFAS Asset Management:
"We are close to an attractive entry point, but I don’t see a sharp recovery. It will be gradual and earnings-driven."

A Silver Lining? Signs of Stabilization in Market Selling

Data from Nuvama Wealth Management Ltd suggests that the pace of selling by company founders and employees has slowed considerably.

• This quarter: ₹4.9 billion in share sales.
• Previous 8 quarters (average): ₹114.3 billion.

This could signal that market insiders are less pessimistic than before, potentially hinting at stabilization in the near future.

Valuation Check: Is It Time to Buy?

Despite the downturn, India’s stock market still trades at higher valuations than its regional peers.

• The NSE Nifty 50 Index currently trades at 18x forward earnings, down from 21x in September.
• However, this remains higher than many emerging Asian markets, making some investors hesitant.

What’s Next for Indian Equities?

For a strong market rebound, these factors will be crucial:
Corporate earnings recovery and profit growth stabilization.
Increased consumer spending, especially in rural areas.
Clarity on US-India trade relations and potential tariff risks.

While bargain hunters see opportunities, global funds are waiting for stronger fundamentals before making big moves. As India navigates these market uncertainties, investors are left watching whether the worst is over—or if more turbulence lies ahead.