Sebi Chief Says FPI Outflows Not a Concern as Long-Term Confidence Remains Strong

Foreign portfolio outflows from India’s equity markets are not a cause for alarm, SEBI Chairman Tuhin Kanta Pandey said in an interview with the Times of India. He explained that while short-term volatility is influenced by global macroeconomic factors, the long-term growth trajectory of FPI assets remains solid.

Over the past decade, foreign portfolio investors (FPIs) have increased their assets under custody from $827 billion to $907 billion, marking a steady 12% compound annual growth rate (CAGR). Pandey underscored that this expansion reflects continued confidence in India’s financial markets, which have outperformed most other emerging economies.

India’s Market Performance and Regional Context

Pandey noted that the MSCI India Index has consistently outperformed comparable indices in other emerging markets, including China, Hong Kong, Taiwan, and Korea over six-, ten-, and fifteen-year timeframes. This sustained performance, he said, demonstrates the resilience and appeal of India’s equity markets to long-term global investors.

Although some investors have reduced exposure over the last two years, he clarified that these withdrawals were not structural, but rather a response to valuation adjustments and shifting global liquidity conditions. He added that FPIs typically consider factors such as price-to-earnings ratios, sectoral growth prospects, and relative macroeconomic stability when making portfolio decisions.

SEBI’s Initiatives to Deepen and Secure Markets

Beyond managing market flows, SEBI is advancing several measures to strengthen India’s capital markets and attract a more diverse investor base. The regulator is developing new derivative products, including in metals and corporate bonds, to expand trading opportunities and enhance market depth.

In parallel, SEBI is increasing efforts to safeguard investors from cyber fraud, simplify compliance systems, and ensure greater transparency in financial reporting. The regulator is also working on revising the penalty framework for brokers and maintaining quarterly results disclosures, which remain critical for ensuring corporate accountability and investor trust.

Long-Term Investor Confidence Remains Strong

Despite recent capital flow volatility across global markets, India’s underlying fundamentals continue to attract strong institutional interest. Pandey reaffirmed that foreign investors view India as a structurally attractive, long-term growth market, supported by robust corporate earnings, macroeconomic stability, and regulatory reforms.

SEBI’s proactive supervision and ongoing policy adjustments are designed to mitigate external shocks and maintain orderly market conditions. Pandey’s comments underscore the regulator’s focus on fostering market resilience, depth, and investor confidence all of which remain vital to sustaining India’s growth trajectory in the global financial landscape.

Read More: SEBI Tightens Block Deal Rules

Conclusion

SEBI Chairman Tuhin Kanta Pandey’s reassurance that FPI outflows are under control highlights the regulator’s confidence in India’s capital markets. With sustained growth in foreign portfolio assets and consistent outperformance against regional peers, India’s equity ecosystem remains one of the most attractive emerging markets globally.

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