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Foreign Institutional Investors (FIIs) have pulled out a staggering Rs 1,98,103 crore from Indian equities in 2025 so far, with September alone witnessing outflows worth Rs 27,163 crore through exchanges.This selling streak continues a broader trend that has persisted for nearly two years, raising concerns about the sustainability of foreign capital in Indian equity markets.Despite ongoing selling through secondary markets, FIIs maintained their long-term trend of participating in primary equity offerings, investing Rs 3,278 crore via the primary route in September.However, the equity sell-off has far outweighed the inflows, pushing cumulative FII selling to Rs 3,19,313 crore over the last 21 months, including Rs 1,21,210 crore worth of outflows in 2024.This persistent exit of foreign capital comes even as Indian markets have shown relative resilience, with benchmark indices maintaining elevated levels amid strong domestic inflows and robust earnings forecasts.However, analysts believe the FII strategy reflects a combination of valuation concerns and global allocation shifts.According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, “Sustained FPI selling continued in September with the sell figure through exchanges touching Rs 27163 crores. However, in keeping with the long-term trend of buying through the primary market, FIIs bought equity for Rs 3278 crores in September. The sales in September take the total sell figure for 2025 to Rs 198103 cr. This massive selling on top of the Rs 121210 crore selling in 2024 takes the total FII selling to Rs 319313 crores for the last 21 months.”Vijayakumar attributed the shift in FII flows to underperformance in Indian markets relative to global peers.“It is important to understand that the FII strategy of selling in India and moving the money to other markets has paid rich dividends to FIIs since India has been underperforming most markets during the last one year, with a one-year return in negative territory,” he said.He further added that valuation gaps have also contributed to the redirection of foreign flows. “Higher valuations in India and cheaper valuations elsewhere have been the principal drivers behind the FII strategy. Now that the valuation differential has come down and Indian earnings are likely to improve in FY27, FIIs are likely to slow down selling, going forward.”While near-term volatility due to FII activity may persist, market participants will be watching closely for signs of moderation in outflows as valuations stabilise and the corporate earnings outlook improves.Also read: Goldman Sachs initiates coverage on Data Patterns, PTC Industries and 6 other Indian defence stocks, sees up to 58% upside(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

The microfinance industry, after enduring a turbulent phase, is now on a gradual path to recovery, supported by operational reforms and structural shifts that promise to strengthen the sector’s long-term fundamentals. While the road to normalization is slower than anticipated, industry experts believe the worst of the credit cycle is behind.Industry data indicates that the gross loan portfolio (GLP) moderated to ₹3.5 trillion as of June 2025, a sharp ~17% year-on-year contraction from ₹4.3 trillion in March 2024. This recalibration reflects a deliberate slowdown in disbursements, forward flows, and accelerated write-offs as players sought to strengthen balance sheets and tighten underwriting practices. Disbursements also fell 26% year-on-year in the first quarter of FY26, underscoring the cautious stance adopted by lenders.A significant driver of the sector’s next growth phase is the adoption of digital underwriting, stronger monitoring of borrower overlaps, and the use of proprietary scorecards powered by bureau and in-house data. These measures are reshaping risk frameworks and creating more resilient portfolios. At the same time, product diversification is gaining momentum, with lenders expanding beyond traditional joint liability group (JLG) loans into unsecured business loans, MSME financing, and micro-loans against property—developments expected to reduce cyclicality and improve operating leverage.Regional variations continue to influence recovery patterns. While Karnataka has shown improving collection efficiencies following regulatory challenges earlier this year, states like Assam remain sensitive due to limited borrower repayment capacity. Seasonal disruptions such as floods in Punjab and Jharkhand have also temporarily pressured collections. Nevertheless, industry-level collection efficiency is on an improving trajectory, aided by sharper recovery efforts and recoveries even from written-off pools.The funding environment, strained over the past year due to rating downgrades and covenant breaches, is also set to improve as profitability returns. Better access to bank funding and easing borrowing costs should support expansion in the medium term.In the near term, profitability is expected to remain weighed down by legacy stress and elevated credit costs, with a more meaningful rebound anticipated from the second half of FY26 into FY27. Beyond that, stronger disbursement momentum, moderation in credit costs, and portfolio diversification are likely to drive sustainable growth.With discipline, digital adoption, and a sharper focus on portfolio resilience, the microfinance industry is poised to re-emerge stronger, offering renewed opportunities in India’s financial inclusion landscape.Credit Access: Buy| Target Rs 1660CreditAccess Grameen has navigated the recent stress cycle with accelerated write-offs, leaving limited residual risk on its book. Incremental PAR has stabilized at ~40bp and is expected to decline further from 3QFY26, with collection efficiencies improving across states.The cost of funds has eased to ~9.7% and is likely to fall to ~9.5% by year-end, supporting margins. While 2QFY26 will mirror the softness of 1Q, stronger AUM growth, operating leverage gains, and lower credit costs are expected from 2HFY26.We project FY25–28 AUM/PAT CAGR of ~20%/~59%, with RoA/RoE at 5.1%/20% by FY27. Strong discipline and execution justify premium valuations.Fusion Finance: Buy| Target Rs 240Fusion Microfinance has executed a strategic and operational revamp, strengthening credit policies, technology, and management. This is driving higher disbursements, better collections, and lower attrition.Tighter underwriting, district risk filters, and stronger recovery have improved asset quality, with flow rates <4% and rising write-backs. Digital onboarding and pre-approved loans (50–60% of disbursements) are boosting efficiency and ticket sizes.With operations stabilizing, Fusion targets ₹5–5.5b monthly disbursements, scaling to ₹7–8b by FY27 without adding cost. Profitability should return from 3QFY26, with RoA/RoE reaching 4.3%/14% by FY27E.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)

David Solomon, Chairman and CEO of Goldman Sachs, has cautioned investors about the potential for a stock market drawdown within the next 12 to 24 months. Speaking at Italian Tech Week in Turin, Italy, Solomon pointed out that markets often move in cycles, and a significant correction could follow the extended bull run fueled by enthusiasm around artificial intelligence (AI).“Markets run in cycles, and whenever we’ve historically had a significant acceleration in a new technology that creates a lot of capital formation, and therefore lots of interesting new companies around it, you generally see the market run ahead of the potential,” Solomon said according to a CNBC repoprt, noting that in such cycles, “there are going to be winners and losers.”Solomon warned that a large amount of capital currently being deployed into emerging AI ventures might not deliver the anticipated returns.“I wouldn’t be surprised if in the next 12 to 24 months, we see a drawdown with respect to equity markets,” he said. “I think that there will be a lot of capital that’s deployed that will turn out to not deliver returns, and when that happens, people won’t feel good.”While Solomon said he would refrain from using the word "bubble," he indicated that investor behavior is being driven more by excitement than by risk-adjusted analysis. “I know people are out on the risk curve because they’re excited,” he said, cautioning that such sentiment can result in ignoring potential downsides.“There will be a reset, there will be a check at some point, there will be a drawdown. The extent of that will depend on how long this [bull run] goes.”Historical parallels: Dotcom bubble as a reference pointTo contextualize his concerns, Solomon drew comparisons with the dotcom era of the late 1990s and early 2000s. During that period, the rapid adoption of the internet led to the creation of some of the world’s most valuable technology firms.However, the initial wave of investment, driven by enthusiasm and speculation, also gave rise to the dotcom bubble.Solomon noted that while the internet ultimately reshaped the global economy, the early phase of the digital revolution saw capital being pumped into businesses with unproven business models. When expectations were not met, markets corrected sharply, causing widespread losses for investors.The Goldman Sachs chief suggested that a similar phenomenon may be unfolding today, where rapid technological advancements—in this case, AI—are creating optimism and driving capital inflows, possibly ahead of commercial realities.Although Solomon did not predict an identical outcome, he acknowledged that the pattern of hype outpacing fundamentals has historical precedent.Also read: Goldman Sachs initiates coverage on Data Patterns, PTC Industries and 6 other Indian defence stocks, sees up to 58% upsideAI’s meteoric rise and market impactSolomon’s remarks come at a time when AI has become one of the dominant themes in global financial markets. The emergence of large language models, rapid advancements in generative AI, and the commercial success of tools like ChatGPT have spurred a surge in interest among investors and corporates alike.Tech giants such as Microsoft, Alphabet, Nvidia, and Palantir have seen their valuations rise sharply amid heavy investment into AI infrastructure and applications. Billions of dollars have been committed to AI startups and partnerships, including multibillion-dollar deals with AI developers and cloud providers.This wave of enthusiasm has helped lift major equity indices, even as broader economic factors—such as trade policy uncertainties and inflation—have posed challenges.Solomon acknowledged that the AI boom has indeed brought about real innovation, noting that “new companies are being formed, and the potential of this technology deployed into the enterprise can be very, very powerful.”At the same time, he warned that markets may be underestimating execution risk. He emphasized that while the technology is exciting and transformative, there is still the possibility that a considerable portion of the capital deployed may not result in viable or profitable outcomes.Potential implications for equity markets and investor sentimentThe potential drawdown Solomon referred to stems not from a singular event but from the nature of capital cycles in emerging technologies. According to him, when markets become overly optimistic, they tend to downplay risks, focusing only on the upside.This behavior, he suggested, can create an environment where corrections become inevitable once expectations outpace results.Other industry leaders have echoed similar concerns. At the same event in Turin, as reported by CNBC, Amazon founder Jeff Bezos commented that AI may currently be in an “industrial bubble.”Separately, veteran investor Leon Cooperman told CNBC earlier in the week that markets appear to be in the “late innings of a bull market where bubbles can form,” referencing a sentiment that legendary investor Warren Buffett had also highlighted in the past.Karim Moussalem, Chief Investment Officer of equities at Selwood Asset Management, described the AI trade as one of the great speculative phases in market history, warning of “enormous risks” that could quickly unravel.Still, Solomon maintained that while capital may be lost in the process, the broader arc of AI innovation remains compelling.“I sleep very well,” he said. “I’m not going to bed every night worried about what will happen next.” He added that the expansion of the AI ecosystem and its enterprise potential make this an “exciting time,” even if market participants should remain mindful of the risks involved.Solomon’s remarks underscore the duality of the current AI investment wave, highlighting both the enormous promise of the technology and the cyclical nature of markets that have, in the past, been shaped by similar periods of exuberance.Also read: Zerodha co-founder Nithin Kamath welcomes RBI’s move to raise share-backed loan limit to Rs 1 crore(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

Munich Airport in Germany reopened Saturday morning after being closed overnight for the second time in less than 24 hours due to suspected drone sightings, the airport said in a statement. The closures are part of a series of mysterious drone overflights affecting airports and critical infrastructure across European Union countries. The airport, one of Germany’s busiest, resumed operations gradually from 7 am local time (0500 GMT) Saturday. Normally, flights begin departing around 5 am. At least 6,500 passengers were impacted by Friday night’s closure, while the previous shutdown on Thursday night affected nearly 3,000 travellers. Authorities have not provided any information about who might be responsible for the drone incursions. Similar incidents have been reported in Belgium, where drones were spotted over a military base, and in Oslo, Norway, affecting flights late last month. European officials have raised concerns that Russia could be behind the drone activity, though experts note that any operator with drones could be responsible. Russian authorities have denied involvement in recent incidents, including those in Denmark. Germany’s Interior Minister Alexander Dobrindt said he and other European counterparts would discuss the situation and a “drone detection and defense plan” at a meeting this weekend in Munich. He added, “We are in a race between drone threat and drone defence. We want to and must win this race,” speaking in Saarbrücken alongside Chancellor Friedrich Merz and French President Emmanuel Macron during a ceremony marking the 35th anniversary of Germany’s reunification.(With inputs from AP)

Indian markets have had a rough ride in 2025, with Nifty barely up 4% while gold and silver soared. Amid global uncertainties — from tariffs to geopolitical tensions — investors are looking for direction. Chirag Muni, Executive Director at Anand Rathi Wealth, shares why, despite the volatility, the current market setup could be an opportunity for long-term investors, and how mutual funds and retail participation are shaping the outlook.Excerpts:Q. Let’s start with the markets. 2025 has been tough for Indian equities, while commodities like gold and silver have done well. What’s your take on Sensex and Nifty?Chirag Muni: As you rightly mentioned, global uncertainties—tariffs, geopolitical tensions, and wars—have kept markets on edge. Gold and silver have performed well because they are sentiment-driven assets. Gold demand rises in uncertain times, with central banks like India and China buying to diversify from the dollar. Silver’s demand is partly industrial, for EVs, solar panels, and semiconductors.Equities, however, historically deliver better long-term returns. Over a five-year horizon, Nifty has given more than 10% returns 82% of the time, whereas gold and silver range between 40–50%. Despite global uncertainties, the Indian market has cushioned itself. From a long-term perspective, this presents an opportunity rather than a risk.Q. Could Trump’s 100% tariff on drugs affect mutual funds in the pharma sector?Chirag: The tariff mainly affects branded and patented drugs, not generics, which constitute most Indian exports to the U.S. Mutual fund exposure to pharma is around 8–9%, so overall impact is limited. Specialty drugs might see some effect, but it’s not a major long-term concern.Q. How should investors approach the rest of 2025?Chirag: The market has undergone price and time corrections. From a peak of 26,000 last year to a low of 22,000, and now back to 25,000, it's an opportunity. Long-term investing is driven by macro factors, and India’s fundamentals remain strong: GDP growth around 6.5%, low inflation at 2.1%, and interest rates already cut by 100 bps. Valuations are fair, and earnings are expected to rebound.From a short-term perspective, FIIs have been selling, but DIIs and retail SIPs continue to provide liquidity. This makes it a favorable environment for investors with a 3–5 year horizon. The one-year forward PE suggests the market could reach 26,500–27,000 by year-end, implying a potential 10–11% return.Q. Quant funds have not been performing well. What’s happening with Quant Mutual Funds?Chirag: Quant faced challenges last year due to regulatory investigations and market conditions, which limited fund manager flexibility. However, negative news is mostly cleared, and recent performance has improved. Quant Largecap, in particular, is showing strong recovery due to its flexible, data-driven investment approach.Q. For long-term investors, how should they approach the market now?Chirag: Avoid chasing themes or timing the market. Focus on diversified funds:55–60% largecap20–25% midcap15–20% smallcapFunds to consider include DSP Large & Midcap, Kotak Midcap Fund, Invesco Smallcap, HDFC Flexicap, and ICICI Prudential Focused Equity. A basket of these four to five funds, with a 4–5 year horizon, provides diversification and long-term growth potential. Lump-sum investments are fine after a market correction, as short-term volatility will smooth out over time.Disclaimer: Recommendations, suggestions, views and opinions given by the experts/brokerages do not represent the views of Economic Times.