Are Foreign Investors Coming Back to India? Flows Rise, But Fundamentals Lag

Martin Emery of GMO examines whether the recent pickup in foreign equity flows to India marks a structural shift or a temporary response to sentiment and market dynamics.

• Despite a rebound in flows since April, India remains a short in GMO’s Systematic Global Macro Strategy due to stretched valuations and muted investor sentiment.

• Foreign allocations have historically tracked momentum and risk appetite—both of which remain unfavourable in the current environment.

• GMO’s models continue to project underperformance relative to other EMs, citing elevated profit margins and modest return expectations.

For a closer look at the disconnect between capital flows and fundamentals, read the full analysis.