Foreign Investment in Indian Stocks Falls to 17-Year Low: Bloomberg

NEW DELHI: Foreign investment in India’s stock market has fallen to its lowest level in 17 years, reflecting growing concerns among global investors over valuations, profitability and the availability of attractive investment opportunities, according to Bloomberg.

The decline comes as several international investors have sharply reduced their exposure to Indian equities, with some companies reportedly bringing their investments in selected Indian stocks down to zero.

Global Investors Lose Interest

According to Bloomberg, global investors are increasingly finding Indian equities less attractive as concerns grow over limited opportunities linked to artificial intelligence (AI) and relatively weak returns.

The report said international companies have been withdrawing capital from the Indian market at a faster pace as they look for stronger growth and higher returns elsewhere.

The reduced interest has pushed foreign participation in Indian equities to its lowest level in nearly two decades.

India Becomes Least-Favoured Asian Market

The trend has also been reflected in investor sentiment.

According to a recent Bank of America survey cited by Bloomberg, India has emerged as the least-preferred market in Asia among surveyed investors.

The shift in sentiment represents a significant change for a market that has attracted substantial international investment in recent years on the strength of its economic growth prospects.

Concerns Over Returns and AI Opportunities

The Bloomberg report highlighted concerns that India is offering fewer opportunities in some of the areas currently attracting major global investment, particularly the rapidly expanding AI sector.

At the same time, investors are assessing whether Indian companies can continue delivering returns high enough to justify their valuations.

These concerns have contributed to a decline in foreign investment and increased scrutiny of the performance of Indian equities.

Pressure on India’s Economic Narrative

The sharp fall in overseas investment has intensified debate over the strength of India’s stock market and the sustainability of its broader economic growth story.

Critics of Prime Minister Narendra Modi’s government argue that declining foreign investor confidence raises questions about the effectiveness of economic policies and whether headline growth is translating into attractive opportunities for international capital.

For the Indian government, the challenge is to restore investor confidence, improve market competitiveness and create stronger opportunities in emerging sectors while sustaining economic growth.

The latest figures suggest that foreign investors are becoming increasingly selective about India, with concerns over profitability and investment opportunities weighing on their appetite for Indian equities.