Global fund managers see FIIs pausing selling, paving way for an India rally

Foreign investors, who have been net sellers in recent months, may finally take a breather. Neeraj Seth, Founder and CIO of 3R Investment Managers, said India could be at an inflection point as global and domestic factors start to align.“I do think you will see a pause in selling, some reversal from a flows perspective,” Seth told CNBC-TV18, adding that easing geopolitical tensions and the prospect of lower crude oil prices could also improve sentiment.

The shift in tone from US President Donald Trump on trade talks with India is another factor providing relief to the market. Arvind Sanger, Managing Partner at Geosphere Capital Management, said, “It certainly is quite encouraging that President Trump is saying good things,” but cautioned that negotiations could still stumble.

Also Read | Investors are looking beyond the US, and India must stay ready: DBS’ Taimur Baig
Still, the trajectory of India’s equity market will hinge on domestic growth data. Seth noted that while global flows may turn supportive, “the domestic growth story will prevail post the initial relief rally.”Sanger added that the resolution of trade tensions would ease concerns around Indian IT outsourcing and H-1B visas. “If that overhang has been part of the concern in the IT space, that overhang should go away,” he said.

Also Read | Emerging market flows broaden; India-focused funds see first inflow after five weeks: EPFR Global

Both experts agreed that if tensions ease, India could see a relief rally in equities, but sustained gains would depend on the strength of the domestic economy. Seth highlighted that the Indian rupee’s recent weakness and the Reserve Bank of India’s (RBI) stance will also play a role in shaping foreign portfolio flows.

For the full interview, watch the accompanying video

Catch all the latest updates from the stock market here