Investors Remain Bullish on India Despite FPI Outflows, Says Sebi Chief

Investors Stay Bullish Despite FPI Outflows

Sebi chairman Tuhin Kanta Pandey has reassured investors that foreign portfolio investor (FPI) outflows from Indian markets are not a cause for concern. Speaking to the Times of India, Pandey highlighted that while foreign equity flows can fluctuate due to global conditions, the long-term trend remains robust, with assets under FPI custody growing from $827 billion to around $907 billion over the past decade, reflecting a 10-year CAGR of over 12%.

India’s Strong Market Fundamentals Attract Investors

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Pandey emphasised that the fundamentals of the Indian market continue to attract investors. “India has a strong story. MSCI India has consistently outperformed most other emerging markets over 6-, 10-, and 15-year horizons,” he said. According to the Sebi chief, short-term outflows over the past two years should not be alarming, as FPIs evaluate multiple factors, including price-to-earnings ratios relative to peers and developments in other emerging markets such as China, Hong Kong, Taiwan, and Korea.

Sebi’s Market Reforms and Product Expansion

On market reforms, Pandey confirmed that Sebi is working closely with stakeholders to deepen Indian markets and expand product offerings, including new derivatives on metals and corporate bonds. He reiterated that the regulator will continue quarterly result reporting and is in the process of reworking the penalty framework for brokers to strengthen compliance and investor protection.

Focus on Cybersecurity and Investor Protection

Cybersecurity is another area of focus for Sebi. Pandey assured that measures are being taken to protect investors from cyber frauds, highlighting the regulator’s proactive approach in safeguarding market participants.

Overall, Pandey’s remarks underline Sebi’s commitment to maintaining market integrity, promoting product innovation, and ensuring long-term investor confidence, even amid global volatility and temporary fund outflows. Analysts suggest that with such regulatory support and India’s resilient fundamentals, investor sentiment is expected to remain positive in the medium to long term.

Conclusion

Strong fundamentals, steady regulatory control, and investor trust support India's equities markets' resilience in the face of volatility in foreign capital inflows.  Sebi's efforts in cybersecurity, product diversification, and market development should increase the nation's attractiveness to both domestic and foreign investors.