Bank of America: Foreign capital outflows from the Indian stock market may continue

Glonghui, May 22｜Bank of America Global Research stated that as Asia’s artificial intelligence winners offer stronger earnings prospects at cheaper valuations, foreign investors’ sell-off of Indian stocks may persist until next year. Amish Shah, Head of India Research at Bank of America, said: “India faces earnings downgrades, while other AI-driven markets are seeing upgrades.” He said, it is unlikely for global investors to return to India “before 2027 or even 2028”, “this definitely doesn't look like something that will happen in 2026.” As global investors continue to chase AI-related investments in other parts of Asia, a weakening rupee has exacerbated a record $23 billion outflow by foreign investors, making the local Indian stock market one of the world’s worst performers so far in 2026. Without significant expansion in earnings growth, India’s high valuations are likely to remain under pressure.