India’s Equity Market Faces a Valuation Test as Global Funds Reassess Exposure

Mumbai, 19 September 2026 – India’s equity market is entering a more demanding phase as foreign investors balance the country’s structural growth story against premium valuations, uneven earnings momentum and stronger competition for capital from technology-heavy Asian markets. The debate is not about whether India remains a major long-term investment destination. It is about the price investors should pay while global yields, oil costs, currency movements and the pace of corporate profit growth remain decisive.

India has slipped from a longstanding overweight position among many emerging-market and Asia ex-Japan funds to an underweight position over the past two years. Research published this month estimates that the market carries a weight of about 12% in the MSCI Emerging Markets benchmark, giving it sufficient scale and liquidity to influence regional allocations. Yet foreign managers have often preferred South Korea and Taiwan when seeking direct exposure to the artificial-intelligence hardware cycle, leaving India to compete on domestic growth, financial services, consumption and manufacturing.