India Regaining Foreign Investor Confidence as Earnings Improve and Rupee Stabilises, Says Neuberger Berman

India is seeing renewed interest from foreign investors as corporate earnings show signs of improvement and the rupee stabilises, according to Conrad Saldanha of Neuberger Berman. The shift comes after a period in which foreign portfolio investors pulled significant capital from Indian equities amid elevated global interest rates, oil price volatility, and concerns over emerging market allocations, underscoring how sensitive India's inflows remain to the global risk environment.

Saldanha noted that investor confidence in India is gradually recovering, supported by renewed foreign portfolio inflows. Foreign institutional investors have been key participants in Indian equity markets, and their return marks a shift in sentiment after a period of volatility driven by global macroeconomic concerns. India's weight in the MSCI Emerging Markets index has risen materially over recent years, meaning that when global funds rebalance toward emerging Asia, Indian large-caps are increasingly prominent recipients of that allocation.

Sector Preferences and Earnings Outlook

Saldanha expressed continued preference for financials and select mid-cap growth stocks. India's financial sector, anchored by major lenders such as ICICI Bank, has historically been a significant component of benchmark indices and a focal point for institutional investors. Credit growth in India has been supported by robust domestic demand, expanding retail lending, and continued formalisation of the economy, all of which underpin earnings visibility for large private-sector banks.

He also highlighted data center and power equipment demand as areas expected to support future earnings growth. The expansion of data infrastructure in India has been driven by increasing digital adoption, cloud computing, and artificial intelligence applications. India's Digital Public Infrastructure—including the unified payments interface and widespread mobile connectivity—has accelerated technology adoption across consumer and enterprise segments, creating downstream demand for compute and storage capacity. Companies such as Netweb Technologies and infrastructure players like GMR Airports have attracted attention amid this trend. Persistent demand for power equipment is also seen as a tailwind, given India's ongoing efforts to expand electricity access and upgrade grid infrastructure, with the government's capital expenditure on transmission and renewable integration reinforcing the order pipeline for domestic manufacturers.

Rupee Stability and Macro Factors

The stabilisation of the rupee has been a contributing factor in restoring investor confidence. Currency stability reduces uncertainty for foreign investors repatriating returns and generally supports equity inflows. The Reserve Bank of India (RBI) has historically intervened in foreign exchange markets to manage excessive volatility in the rupee, and India's substantial foreign exchange reserves provide a buffer that distinguishes it from several peer emerging markets more vulnerable to currency shocks.

India remains one of the world's fastest-growing major economies, and its equity markets have drawn sustained interest from global asset managers seeking exposure to emerging market growth. Firms such as Bharti Airtel, a leading telecommunications provider, and Persistent Systems, an IT services company, are among the names frequently referenced in discussions about India's corporate earnings trajectory.

Source: CNBC-TV18