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FPIs turn net buyers of Indian equities since July
OmniScience Capital CEO Vikas Gupta links the shift to possible reallocation toward non-AI assets as global inflation dynamics shape rate expectations.
Foreign portfolio investors have turned net buyers of Indian equities since July, a development OmniScience Capital CEO and strategist Vikas Gupta said could signal a broader sentiment turnaround, according to an interview with Mint.
Gupta argued that non-AI diversification may drive additional inflows, pointing to higher-than-usual emerging market index allocations in Taiwan and South Korea versus their long-term weights, and suggesting India could receive more of those non-AI allocation dollars.
He also tied the outlook to global inflation and central bank policy, saying a US inflation spike would likely push the Federal Reserve toward higher interest rates, but that the most likely path is rate stability because jobs data and inflation could be in tension.
Gupta added that bond yields in highly developed markets remain a drag on FPI flows, while the global outlook for energy, commodities, and food inflation and ongoing AI capital spending could keep the cost of capital elevated.
He said Japan’s central bank may need to raise rates to protect the currency and limit import-driven inflation, and described the pace of US government debt issuance as another factor pressuring bond markets and influencing investor allocations toward underexposed markets like India.