Why FPI Pessimism Is No Cause for Alarm

Foreign portfolio investors (FPIs) have been pulling money out of Indian equities. India has even slipped to the bottom of Bank of America’s Asia fund-manager preferences. Should this really worry us? In this audio, Debashis Basu explains why the FPI pessimism may be less alarming than it appears. While foreign investors remain heavily concentrated in large-cap stocks, Indian mutual funds and domestic investors are increasingly directing money towards small- and mid-cap companies—many of which are benefiting from powerful growth trends across pharmaceuticals, engineering, capital goods, defence, power and services. The numbers tell an intriguing story: while FPIs withdrew more than $50 billion from Indian equities between October 2024 and June 2026, mutual-fund SIPs brought in roughly ₹6.31 lakh crore during October 2024–July 2026. Basu also examines the much-discussed “AI opportunity” and asks whether India really needs to worry about not having a large listed semiconductor or AI hardware sector. More importantly, he argues that India should focus less on short-term FPI sentiment and more on attracting long-term foreign direct investment (FDI), particularly into manufacturing. The bigger question is not whether global fund managers currently prefer India. It is whether India can become the destination of choice for global manufacturers. Hosted on Acast. See acast.com/privacy for more information.