Foreign investors have cut Indian equity exposure to record underweight levels, but resilient domestic demand and sustained buying by local institutions could support a return, Trust Mutual Fund CIO Mihir Vora says.
Foreign institutional investors may be poised to return to Indian equities after cutting exposure to record underweight levels, according to Mihir Vora, chief investment officer at Trust Mutual Fund, who said the broader market still has room to deliver healthy growth despite persistent concerns about valuations.
Speaking to NDTV Profit, Vora said he was not especially worried about current price levels, arguing that resilient domestic demand remains the key support for Indian shares. He said consumption has held up well even as inflation, higher oil prices and tariffs have weighed on the global backdrop, and added that India has handled those pressures better than many peers.
That view comes as foreign selling continues to dominate flows. NDTV Profit reported that foreign institutional investors sold shares worth Rs 44,649.56 crore across the first nine trading sessions of October, while domestic institutional investors bought Rs 48,510.02 crore over the same period, more than offsetting the foreign outflows. On October 14 alone, FIIs were net sellers of Rs 1,857.44 crore, while DIIs bought Rs 2,670.44 crore.
Vora said investors should remain selective rather than treating the market as a broad one-way trade. He pointed to the sharp correction seen earlier in banking and non-banking finance company shares as a reminder that stock picking matters. He also said the recent strength in information technology stocks has owed more to their relative resilience than to any strong earnings growth outlook, describing the sector’s growth profile as mediocre.
He flagged hospitals as another area where sentiment could come under pressure, citing the Supreme Court’s scrutiny of drug pricing and the possible effect on hospital profit after tax. At the same time, he said fiscal 2027 has begun against a demanding comparison base, though he still sees domestic demand holding up and global economies continuing to show reasonable traction.
The broader market has also been aided by local institutional support. On Thursday, Indian benchmark indices rallied sharply, with the Sensex and Nifty both moving close to key technical levels as investors bought back into the market. NDTV Profit said the Nifty approached 23,000 during the session, even as foreign investors remained cautious. Data from other market trackers cited in recent reports showed a similar pattern, with domestic funds repeatedly absorbing foreign selling across September and October, underscoring the growing role of local capital in cushioning Indian equities from global risk aversion.
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