FIIs May Be Selling, but Indian Markets Remain a Long-Term Opportunity

Market Leaders Weigh In on India's Investment Potential

Veteran investor Ramesh Damani recently addressed concerns surrounding foreign investor outflows and India's recent market underperformance, emphasizing the country's status as a top long-term investment opportunity despite global volatility and the ongoing AI-driven rally elsewhere.

Speaking at the Groww's Investor Festival in Mumbai on Saturday, alongside Abakkus AMC's Sunil Singhania, Damani noted that domestic investors were now strong enough to absorb global outflows. He argued that local investors have a deeper understanding of Indian businesses compared to overseas funds, and are increasingly willing to back quality companies during periods of volatility.

The current market conversation revolves around foreign investors shifting allocations toward technology-heavy markets such as Taiwan and Korea amid the global artificial intelligence boom. Damani acknowledged that India is behind in certain advanced technologies, but emphasized that market leadership constantly evolves. He noted that returns are never linear, and that the country had its own phase of growth, which may be being matched by other countries at present.

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Abakkus Mutual Fund's Sunil Singhania, who was also on the panel, agreed that India lags in semiconductors and deep-tech infrastructure, but stressed that investors should not ignore the country's long-term structural strengths. He pointed out that these businesses are capital-intensive and cannot sustain unusually high returns forever. Singhania highlighted India's strengths in consumption, demographics, and digitization, noting that the country's consumers, data, and AI applications are all domestic.

Damani also pointed out that Indian equities are going through a healthy phase of consolidation after the extraordinary gains seen post-pandemic. He noted that investors have become accustomed to double-digit returns after COVID, but emphasized that such returns are not sustainable in the long term.