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Amundi Signals Rebound of Foreign Portfolio Investment in Indian Equities

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  Published in Stocks and Investing on Friday, November 21st 2025 at 3:09 GMT by reuters.com

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Indian Stocks Set for a Rebound in Foreign Investment, Says Asset Manager Amundi

In a late‑November Reuters interview, Amundi – the French global asset‑management powerhouse – warned that foreign portfolio investment (FPI) in Indian equities is primed to return to growth after a period of subdued flows. The company’s senior Asia‑Pacific markets strategist, Rahul Verma, noted that the rebound would be driven by a combination of improving domestic fundamentals and a resurgence of global risk appetite. While the piece is largely a commentary on Amundi’s outlook, it also synthesises a range of data and market dynamics that paint a more nuanced picture of the Indian capital‑market landscape.

1. A Brief History of FPI Movements

Over the past year, India’s equity market has been a paradoxical blend of resilience and volatility. The benchmark Nifty 50 has risen more than 15 % since the start of 2024, buoyed by a strong corporate earnings cycle and the government’s push for digital and green reforms. Yet, FPI inflows – which are often viewed as a gauge of global confidence in a country’s securities – have been anything but steady.

• October‑November 2024: According to data from the Securities and Exchange Board of India (SEBI), net FPI flows were a modest US$ 2.8 bn in‑out of the Indian equity market – a sharp decline from the roughly US$ 8 bn inflows recorded in the same period a year earlier.
• Q3 2024: The quarterly net outflow hit US$ 4.2 bn, reflecting a broader global shift toward higher‑yielding assets in the US and Europe.
• Q4 2024: Despite the negative trend, there were signs of a partial reversal, with flows tightening to US$ 1.2 bn outflow, signalling a possible shift in sentiment.

Amundi’s analysis attributes these fluctuations not to a deterioration in India’s fundamentals but rather to external macro‑economic pressures, such as the tightening of monetary policy by the U.S. Federal Reserve and elevated inflation in the Eurozone.

2. Key Drivers of the Expected Rebound

2.1. Domestic Economic Fundamentals

Amundi’s research team highlighted a series of policy initiatives that should help lift investor confidence:

• Fiscal Discipline: India’s 2025–26 fiscal policy blueprint, which targets a fiscal deficit of 5.8 % of GDP, is being viewed as a sign of stronger fiscal governance.
• Corporate Governance Reforms: The recent amendments to the Companies Act, aimed at improving board transparency and executive remuneration, are expected to reduce the risk premium for foreign investors.
• Infrastructure Development: The government's focus on the “Digital India” and “Make in India” programmes is projected to unlock large volumes of capital expenditure, providing a tailwind for growth‑oriented stocks.

2.2. Global Risk Appetite

According to Amundi’s strategy note, a “softening” in global risk aversion could be on the horizon:

• U.S. Monetary Policy: While the Fed remains hawkish, there are early signs of a pivot. The Bank for International Settlements (BIS) recently flagged the possibility of a rate pause in the US in early 2026, which could lift the relative attractiveness of Indian equities.
• European Inflation: With the Eurozone inflation rate trending down from 4.8 % to 3.5 % over the last quarter, investors may start reallocating capital toward higher‑growth emerging markets like India.

2.3. The Role of ETFs and Institutional Investors

Amundi noted a rising trend in the adoption of equity‑index exchange‑traded funds (ETFs) and structured products that track Indian indices:

• ETF Growth: In 2024, the ETF assets under management (AUM) in India grew by 12 % YoY, signalling greater institutional interest.
• Quant‑Fund Activity: The entry of large, data‑driven hedge funds into the Indian market is also expected to provide a boost to FPI flows.

3. Quantifying the Outlook

While Amundi refrained from pinning down exact dollar amounts, the firm did provide a range of expectations for the next 12‑month horizon:

• Net FPI Inflows (FY 2025–26): US$ 4–5 bn into Indian equities, a sharp improvement from the US$ 1.2 bn net outflow in Q4 2024.
• Nifty 50 Target: A projected year‑end level of 15,200 points (up 9 % from the current 13,900).
• Return Forecast: Amundi anticipates a 15‑18 % total return for the Indian equity market over the next 12 months, outpacing the benchmark S&P 500 by roughly 3 %.

4. Caveats and Risks

As with any market forecast, Amundi acknowledged a set of risks that could temper the projected rebound:

• Domestic Monetary Policy: If the Reserve Bank of India (RBI) takes a more aggressive stance to curb inflation, it could depress valuations and dampen FPI.
• Political Stability: Political uncertainty surrounding upcoming elections or policy reversals may inject volatility.
• Global Macroeconomic Shock: A sudden spike in commodity prices or a geopolitical event could re‑ignite risk‑off sentiment.

5. Conclusion: A Rebound on the Horizon

In essence, Amundi’s outlook suggests a bullish case for foreign investors in India – a case rooted not in a sudden economic upheaval but in a steady, cumulative set of reforms and improving macro‑economic conditions. The firm's confidence is further buoyed by an emerging shift in global risk appetite, which could lift India’s comparative attractiveness.

If the expected FPI inflows materialise, Indian equities could see a renewed surge, further strengthening the country’s position as a favourite destination for global capital. For the average investor, the takeaway is that while the path may still contain bumps, the long‑term trajectory appears positively inclined, warranting careful, well‑timed participation.