Archive · 29 Aug 2026
Non-AI diversification may boost India’s foreign portfolio inflows
Foreign portfolio investors are large investors from other countries that buy shares.
They have started buying Indian shares again in July and August.
Vikas Gupta thinks they may be exploring Indian investments outside artificial intelligence to balance their portfolios.
He expects the United States Federal Reserve to keep interest rates unchanged for now.
Inflation is still high, but weaker job growth makes rate cuts possible.
Higher bond yields and expensive oil could create problems for India and other emerging markets.
Gupta recommends that long-term investors consider adding to stocks when prices are low.
He especially likes banks, power companies, and housing finance, while saying cheaper oil could help the economy and stock market.
Foreign portfolio investors have been net buyers of Indian equities since July.
Vikas Gupta says non-AI diversification could encourage additional foreign allocations to India.
Gupta expects the Federal Reserve’s most likely course to be holding rates steady.
Higher bond yields, wars, AI capital spending, and government borrowing are pressuring markets.
He favors financial services, power, and housing finance for long-term investors.
- Who
- Foreign portfolio investors and Vikas Gupta, CEO and strategist at OmniScience Capital.
- What
- Foreign investors are returning to Indian equities, potentially helped by diversification away from AI-related assets.
- When
- Inflows have been consistent in July and August; the interview discusses the near-term outlook.
- Where
- Indian equities and global markets, including the United States and Japan.
- Why
- India is described as under-allocated relative to its growth, while investors seek portfolio balance amid inflation, interest-rate, and AI investment concerns.
Market pressures
Potential supports
Federal Reserve policy
Market pressures
A spike in United States inflation could force the Federal Reserve to raise interest rates.
Potential supports
Stabilising inflation and declining payrolls could support the case for holding rates steady or eventually cutting rates.
Oil prices
Market pressures
Elevated oil prices could increase import-driven inflation, pressure the currency, and hurt company earnings.
Potential supports
If the Middle East war ends and oil prices fall, India’s currency, earnings growth, and stock market could receive a significant boost.
India’s equity allocation
Market pressures
Higher bond yields in developed markets can weigh on foreign portfolio flows to emerging markets.
Potential supports
Emerging-market investors may shift more equity allocation toward India because Gupta describes it as severely under-allocated and the fastest-growing major economy.
- FPI trend
- Foreign portfolio investors have been net buyers of Indian equities since July.
- Diversification thesis
- Non-AI allocations could help drive additional FPI flows to India.
- Federal Reserve outlook
- Gupta says holding interest rates steady is the most likely course.
- US inflation
- CPI and PCE measures appear to be stabilising but remain above 3%, compared with the Federal Reserve’s 2% mandate.
- Preferred sectors
- OmniScience Capital is overweight on financial services, power, and housing finance.
- Banking conditions
- Gupta cites strong balance sheets, two-decade-low NPAs, and credit growth in the mid-teens.
- Oil-price risk
- Elevated oil prices could pressure India’s foreign exchange position, inflation, and company earnings.