Goldman Sachs Says Foreign Selloff in Indian Markets May Ease, but Global Caution Persists

Mumbai, May 10, 2026: Goldman Sachs has indicated that the prolonged phase of foreign institutional selling in Indian equities may be approaching exhaustion, though global investors remain careful about increasing exposure to Indian markets due to valuation pressures and macroeconomic uncertainties.

According to the global brokerage, while sustained overseas outflows from Indian equities have significantly reduced foreign positioning, the pace of selling is expected to moderate as much of the heavy withdrawal cycle may already have played out. However, international investors are still maintaining a cautious approach toward India amid concerns over elevated market valuations, slower earnings momentum, and external geopolitical risks.

Goldman Sachs recently downgraded Indian equities to a more neutral stance, citing stretched valuations and the possibility that much of India’s long term growth optimism is already reflected in current market prices. The brokerage noted that while India’s structural economic fundamentals remain strong, near term upside could remain constrained unless corporate earnings accelerate or global financial conditions improve.

The firm also highlighted that rising crude prices, currency pressures, and global capital allocation shifts toward other major investment themes have made foreign portfolio managers more selective.

Despite short term caution, Goldman continues to view India as one of the stronger long horizon investment destinations among emerging markets, supported by domestic consumption strength, policy continuity, and economic reforms.

Market analysts suggest that while foreign investor participation may stabilize, a decisive return of large scale global inflows will likely depend on improved valuation comfort, stronger earnings visibility, and reduced external volatility.