• Foreign institutional flows: Heavy foreign institutional investor selling is currently being absorbed by domestic institutions, including mutual funds and pension funds, as global capital chases artificial intelligence trades.
• Policy reform expectations: The government is expected to fast-track economic initiatives and potentially revisit FII taxation rules and single-investor caps to attract foreign capital toward India's $10 trillion economy ambition.
• GDP and inflation outlook: Nominal GDP is projected to reach approximately 11% to 11.5% with inflation around 4% to 4.5%, a level that should support corporate earnings recovery without requiring rate hikes from the RBI.
• Asset allocation strategy: Investors are advised to prioritize dynamic balanced advantage and multi-asset allocation funds during current market volatility, alongside flexi-cap and small-and-mid-cap funds for a 3- to 5-year investment horizon.