Foreign institutional investors have turned cautious on Indian equities amid global risk aversion and valuation concerns, but analysts say India's long-term growth story remains intact.
Estimated Indian market correction over the period
Foreign institutional investors (FIIs) withdrew approximately $5 billion from India-focused offshore funds and ETFs in the first quarter of 2026, according to Morningstar Investment Research. The outflows coincide with heightened global uncertainty, a depreciating rupee, and persistent discomfort around Indian equity valuations.
