New Delhi: Foreign Institutional Investors (FIIs) who have been exiting from Indian equities in 2025, could return to Indian equities based on increasingly lucrative opportunities in capital intensive sectors, a report by Antique Stock Broking has said.
This could renew interest in Indian equities for foreign investors, who pulled out a record ₹2.09 lakh crore this year. According to the report, sectors such as banking, infrastructure and consumption could offer FIIs the potential for the returns they expect, provided the companies adopt AI as per latest global practices.
Banking stocks have seen improved asset quality lately, with stabilised credit costs, motivating Japanese financial conglomerates SUFG and MUFG to invest in Yes Bank and Sriram Housing Finance, respectively.
FIIs may return to invest in various companies which are looking to enhance their operations through AI and digital transformation trends.
For the next two years, Nifty corporate earnings are expected to grow at around 16% CAGR, double that of the roughly 7% recorded in the past two years.
Various manufacturers are looking to diversify their supply chains away from China, and India’s cheaper labour and government support is expected to encourage further investments.
Besides, India’s macroeconomic backdrop has been unusually supportive this year, despite the challenges with the 50% US tariffs. Demand has been growing across the economy, and the lower inflation has boosted discretionary spends, including real estate. Despite the depreciation of the Rupee against the Dollar, India is expected to grow at around 7.5% this year, encouraging FIIs to return.
