Foreign investors fled Indian equities in 2025 at a scale never seen before, pulling out a record Rs 1.6 lakh crore (USD 18 billion) as volatile currency movements, global trade tensions, especially potential US tariffs, and stretched valuations eroded risk appetite, though flows are expected to turn sustainably positive in 2026. Also, rising US bond yields, a stronger dollar and concerns over geopolitical uncertainties tilted global capital towards developed markets, away from emerging markets such as India. Despite the weak showing this year, market participants expect the trend to reverse in 2026. "We expect FPIs to return sustainably in India as nominal growth and earnings pick up in CY26. Closure of the trade deal with the US should narrow tariff differentials, while Fed rate cuts will keep the dollar soft, favouring emerging-market assets," said Garima Kapoor, deputy head of research and economist at Elara Securities India. Apart from global tailwinds, domestic factors are al