Will FPIs return to Indian equities in 2026?

Market strategists suggest conditions are improving for a potential FPI return in 2026, following significant outflows in 2025.

What is the biggest risk for Indian markets in 2026?

The global preference for Artificial Intelligence (AI) exposed markets is a key risk, as India is currently more of an AI user than a producer.

How are corporate earnings expected to perform in India?

Nifty earnings are projected to re-accelerate sharply, with an estimated 16% CAGR growth expected between FY26 and FY28.

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India Equities: FPIs Set for 2026 Comeback?

3 Jan

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Summary

Foreign investors may return to India in 2026 after record outflows in 2025.
Stronger earnings growth is expected, reversing a two-year slowdown.
AI trend favors other markets, posing a risk to Indian tech sectors.

India Equities: FPIs Set for 2026 Comeback?

After a challenging 2025, foreign portfolio investors may re-enter Indian equities in 2026. Record outflows occurred last year due to weak earnings and global risk aversion. However, strategists see improving conditions, with supportive valuations and macro stability.

Corporate earnings are anticipated to grow sharply, with Nifty earnings projected at 16% CAGR from FY26-FY28. India's macroeconomic backdrop remains strong, featuring robust GDP growth, benign inflation, and a low current account deficit, reducing currency risks for foreign investors.

A key challenge for 2026 is the global investor preference for Artificial Intelligence (AI) exposed markets, where India is seen more as a user than a producer. This may lead to sectoral divergence, potentially sidelining Indian tech services and exporters lacking AI monetization stories.