Indian markets are taking sharp hits even with a strong macro picture, as the rupee weakens and massive FII sell-offs spread panic. The unusual disconnect is linked to AI-driven trade flows and delays in trade deals, amplifying volatility. Analysts suggest 2026 may improve if valuations normalize, reforms accelerate, and rupee stability brings FII interest back.
Foreign institutional investors have been selling shares in 146 Indian companies for four consecutive quarters, cutting across sectors and market caps. While some stocks have seen sharp value erosion, others posted gains despite FII exits, leaving investors wondering whether this is a warning signal or a potential contrarian buying opportunity. The pattern is raising fresh questions for retail portfolios.
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