There is a perception among some market veterans that mutual funds are facilitating FPIs exits at high prices, causing the rupee to crash and stocks to fall. What is your view?
FPIs decide allocations based on relative valuations, global liquidity, interest rates, geopolitical developments, and opportunity sets across markets. Had there been no domestic flows, India may have experienced a deeper market correction without necessarily seeing materially lower FPI outflows. One could argue the opposite: the presence of a large and stable domestic investor base is a sign of market maturity. Domestic flows have acted as a stabilising force rather than an enabling force. Net inflows for DIIs (domestic institutional investors) were ₹8.7 trillion in the 12 months to April 2026, versus net outflows of ₹4.1 trillion for FPIs, indicating the counterbalance by DIIs, which include mutual funds.
