India Investing: From T I N A to A N T I

Graph 1: Are Foreign Investors ‘ANTI’ India?

This seems to be a dramatic shift in sentiment towards India investing.

Within emerging markets, over the last 10 years, India was the favored investment destination.

Many regarded India then as ‘TINA’ – There Is No Alternative (but to invest in India).

India was also hyped up as ‘China+1’. The ‘China+1’ theme found limited success in trade and manufacturing. However, India was a large beneficiary of the ‘China is uninvestable’ theme and saw large global capital inflows into private equity and venture capital.

From there to a situation now where foreign investors seem ‘indifferent’ to the allure of the India markets.

Foreign investors seem to be ‘ANTI’ India given the pace of selling and exits from Indian markets.

Foreign ownership of the Indian equity markets is now down to its lowest level since 2012. India’s weight in the MSCI Emerging Markets and MSCI ACWI (All country world indices) has fallen by >30% since the peak of September 2024.

Graph 2: India’s weight in global equity indices fall, India is even more under invested in global portfolios

Past performance does not guarantee future return. This is only for representation and understanding purpose and should not be construed as a recommendation to invest.

A combination of weak currency, poor taxation structure on investments relative to other Emerging markets plus lack of AI play in India seem to have influenced foreign investor to sell India.

However, as I wrote in Simple Story getting Complicated, a large part of India’s relative underperformance can be explained by the fact that in recent times, India’s nominal GDP growth and earnings trajectory has been below its long-term average.

Graph 3: India’s simple story of double-digit nominal GDP and earnings growth got complicated

Past performance is not indicative of future return

India Investing Story is a Growth Story

India commands a premium to Emerging markets predominantly due to its superior earnings profile and corporate return ratios.^v In the current cycle, that expectation is getting belied. Hence, I are witnessing a compression in the relative valuation of India over other emerging markets (see chats below). As India’s growth slows down and relative opportunities seem to be more promising, global investors who allocate to India from their global or emerging market funds seems to be taking capital away from India thus leading to capital outflows as shown above.

Is the Growth and Earnings Cycle changing?

Strong earnings, ahead of consensus expectations, are being reported by companies for March ended fiscal year 2026, especially those exposed to domestic consumption. However, the earnings reflected a limited pass-through of the escalating costs due to West Asia conflict. Some managements have called out future input cost inflation due to rise in key commodity prices and supply chain disruptions in sectors such as autos, cement, agro-chemicals, and capital goods. The consensus earnings growth expectation of 16% for fiscal year ending March 2027 is therefore at risk.

Graph 1: Robust trends in Sales and earnings growth

India’s subdued market performance, its large under-performance to Emerging Market Index and the recent pick-up in earnings has resulted in India’s valuation in absolute and relative terms to trade at around its long-term average at somewhat attractive levels.^vii

Graph 5: Index PE bouncing near long term average

Graph 6: and valuations are attractive on a relative basis

Past performance is not an indicator of future result.

Prime Ministers’ Guided Message

As the Prime Minister, Narendra Modi, exhorts the nation to postpone gold purchases, moderate fuel consumption, adopt natural farming, reduce edible oil in cooking, and to avoid foreign vacations, it is natural to feel anxious and concerned about the state of the economy.

The conflict in Middle East has continued for longer than expected. As I wrote in West Asia Conflict will delay Foreign Investor allocation, India faces idiosyncratic risks from the conflict which can complicate India’s near-term macro situation.

The immediate worry though within the government seems to be stemming from the depreciation of the Indian Rupee. The solution to that is to augment capital flows, something which India has struggled to receive in the past 18 months

The concerns on the economy have increased in the last two months. With the prospect of EL-NINO, India farm and rural incomes may also get impacted if monsoon indeed remains poor.

India must hope and pray that the conflict ceases soon and brings in relief on key commodity supply at softer prices.

Indian stock market valuations appear attractive and given the under-allocated foreign investor positioning, there remains a possibility of a positive sentiment on foreign flows. However, given the enhanced macro risks, it will be prudent to be cautious and gradually scale up the India allocation.

i Source: Hindu Business Line, India enjoying the ‘There is no alternative factor’ – August 2022

ii Source: McKinsey, India’s Private Markets: The Global LP view, March 2026

iii Source: Morgan Stanley research, India Equity Strategy, April 2026

iv Source: Hindu Business Line, May 2026

v Source: HSBC Global Investment Research, India Strategy Note, August 2025

vi Source: Bloomberg Finance L.P.

vii Source: CLSA, Greed and Fear, May 2026

viii Source: BBC PM Modi urges Indians.. 11 May 2026

ix Source: Reuters, How EL Nino-driven weaker rains could impact India

Disclaimer:

Arvind Chari is a Chief Investment Strategist and has been with Quantum Advisors India group since 2004. Arvind has over 20 years of experience in long-term India investing across asset classes. Arvind is a thought leader and guides global investors on their India allocation.

This article is for educational and discussion purposes only and is not intended as an offer or solicitation for the purchase or sale of any investment in any jurisdiction. No advice is being offered nor recommendation given and any examples are purely for illustrative purposes. The views expressed contain information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness, or reliability of the information.

The views and opinions expressed in this article are my personal views and should not be construed of the Firm. There is no assurance or guarantee that the historical result is indicative of future results, and the future looking statements are inherently uncertain and cannot assure that the results or developments anticipated will be realized.