India remains a long-term favourite among foreign investors, but high valuations are prompting investors to recalibrate their portfolios. Mark Coombs, CEO of London-based asset management company Ashmore Group, on Friday said among the emerging markets India remains a significant investor interest.

“India is regarded as one of the most significant economies in the world in the future over the next 10-20-25 years and it is a natural choice for big global investors to look for bigger markets to invest in,” Coombs said at an event organised by Moneycontrol on Friday.

However, from a foreign investor’s perspective, Indian markets remain overvalued and it is evident from the high price-earnings ratio — a metric to measure the valuation of the market against other peers.

While India’s P/E ratio is estimated at 23.32, that of Asian peers like Japan and China are at 15.58 and 10.66, respectively.

A market with a high P/E ratio indicates that investors are optimistic about future earnings, but the market is also overvalued, making investments expensive.

Foreign portfolio investors continued the trend of remaining net sellers on Friday, pulling out ₹2,426.25 crore. Since January 1, 2025, FPIs have withdrawn a total of ₹1,09,122 crore, NSDL data showed.

“What we are seeing in the last 5-6 months of foreign capital disappearing from India, the daily traded equity market in particular was really about the high level of P/E, particularly in the small and midcap space,” Coombs said.

He further said that the global investors over the past few years have weighed India above China.

“A lot of global investors have switched that trade. Monetary policy bazooka in China was fired in September and they are getting serious about fiscal. Eventually, you will get some level of growth coming back,” Coombs said.

India’s benchmark indices Sensex and Nifty on Friday surrendered early gains to close almost flat in a highly volatile trade on Friday with uncertainties looming over the global trade war.

After a two-day winning streak, the 30-share BSE Sensex slipped 7.51 points to settle at 74332.58. Nifty edged up 7.80 points to close at 22552.50.

“Friday was a quiet day with limited upside, but overall, Nifty managed to break its three-week losing streak,” said Rajesh Bhosale, technical analyst at Angel One.