Mumbai, India – Raamdeo Agrawal, Chairman and Co-Founder of Motilal Oswal Financial Services Ltd (MOFSL), has expressed concerns over the prevailing foreign institutional investor (FII) sentiment towards India, despite an encouraging outlook for corporate earnings. Agrawal, a seasoned market veteran, believes global sentiment has deteriorated recently, highlighting a stark contrast between FII outflows and robust domestic institutional investor (DII) inflows.
Addressing the current market dynamics, Agrawal pointed to substantial FII selling of approximately Rs 8.5 lakh crore during Samvat 2082 (roughly October 2025 to October 2026), which was partially offset by DII buying of around Rs 5 lakh crore. While acknowledging these trends, he stressed that the market's ultimate direction is not solely determined by buyer and seller identities, but rather by fundamental factors such as corporate earnings and, to a lesser extent, interest rates.
Earnings Growth and Valuations Offer Support
Despite the cautious FII sentiment, Agrawal remains optimistic about the underlying strength of Indian equities. He stated that recent market corrections have rendered Indian valuations more reasonable from a historical perspective. Coupled with a strong corporate earnings outlook, this combination provides a supportive backdrop for the market.
External Factors: Crude Oil and Geopolitics
Agrawal identified crude oil prices and global trade uncertainties as two pivotal external factors influencing India's economic trajectory. A stable geopolitical environment, smoother global trade, and reasonable crude oil prices are crucial for fostering a favorable domestic economic landscape. He particularly emphasized the significance of oil prices, noting that a meaningful correction in crude would alleviate economic concerns for India, irrespective of geopolitical developments.
However, Agrawal cautioned that elevated oil prices could hinder the pace and confidence of market recovery, even if corporate earnings remain robust. He also highlighted that concerns over a potential weakening of the Indian rupee could continue to weigh on foreign investor sentiment and overall market confidence. Ultimately, Agrawal believes a sharp decline in crude oil prices would instill greater confidence in the market's recovery path.