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Informist, Wednesday, Dec. 10, 2025

 

MUMBAI – Foreign portfolio investors in the US are still in wait and watch mode and they remain underweight on Indian equities, Unmesh Sharma, head of institutional equities at HDFC Securities, said based on his interaction with several FPIs during his recent visit to the US. He said FPIs are waiting for rupee depreciation to ease and any development on the trade deal discussions between the US and India.

 

The rupee has depreciated over 5% against the dollar this year, falling to a record low of 90.4225 earlier this month. At 1349 IST, the rupee was at 89.94 a dollar but several analysts expect it to fall more in the coming months to 92-93 a dollar. Sharma said FPIs are waiting for the rupee to stabilise before making a decision on Indian equities.

 

Sharma said concerns among FPIs over high stock valuations have eased due to the recent underperformance of the Indian equities. However, valuations are still high in absolute terms and FPIs do not find Indian equities to be attractive enough to increase exposure at least at the index level, he said.

 

"(FPIs see) India as genuine option for investment...and nobody has really sold and left," Sharma said. "But, is the conviction very high that this is a market you cannot miss?...that is not there."

 

FPIs were largely concerned about earnings growth and valuations last year, but they are now more worried about currency depreciation and tariffs, he said. "There is some conviction that some resolution will happen (around tariffs)...but I think everyone was caught by surprise by the elongated period of discussion between India and them (US)," he said. The US had increased tariffs on imports from India to 50% from August-end.

 

Sharma said FPIs are more interested in looking at stock-specific opportunities rather than investing at an index level. They are interested to invest in banks, domestic-demand oriented pharmaceutical companies, and some automobile companies dependent on demand from rural areas.

 

They liked the capital expenditure theme but valuations are a concern. High valuations are also a concern for consumer staple companies. FPIs want to stay away from Indian information technology companies for now amid uncertainties. "The concern (for IT sector) was more in terms of the sentiment around what happens to Indian coders because of H1-B (visas) and how Trump behaves," he said.  End

 

Reported by Anshul Choudhary

Edited by Ashish Shirke

 

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