According to a report by Kotak Institutional Equities, Foreign Portfolio Investor (FPI) flows into India are likely to remain subdued in the near term as the country's appeal weakens against other emerging markets. The report cites several factors contributing to this trend, including slowing capital inflows, rising current account pressures, and a deteriorating earnings outlook. Specifically, it notes that India is facing weaker earnings growth expectations and negative exposure to the artificial intelligence and semiconductor cycles, as well as to commodities like crude oil and natural gas. The report highlights a significant decline in annual capital inflows, which fell from an average of USD 73 billion during FY2019-24 to just USD 17 billion in FY2025, with projections suggesting a negative inflow of around USD 5 billion in FY2026. Additionally, net FDI inflows have dropped sharply, from USD 37 billion during FY2019-23 to a mere USD 1 billion in FY2025. The report warns that unless India addresses its structural challenges related to the current account and improves its earnings outlook, FPI flows may continue to face pressure.