Mumbai: Sebi Chairman Tuhin Kanta Pandey on Wednesday said that end of trade frictions through trade deals like the one with the US removes uncertainties, which will help accelerate capital formation.
Replying to a question on whether the trade deal with the US will push foreign investors to get more money into the country, Pandey said such moves can “spur” investment decisions.
“Fundamentally, when you have an overhang of a regulatory action which is removed, and trade frictions removed, so any capital formation is always accelerated,” Pandey told reporters here.
Markets saw this as a step towards reducing external uncertainty, even as foreign investor flows into Indian equities remain volatile. Despite the reduction of external uncertainty, Pandey said foreign investors may also look at the risk-return dynamic in Indian capital markets before deciding whether to re-enter. “FPIs (foreign portfolio investors) and FIIs (foreign institutional investors), they have their own decision, when they go, how they come, and in what return they go,” said the Sebi chief. He added that the trade deal could also lead to “salutary movements on the exchange rate, which also bring in stability and predictability”.
Foreign investors have been exiting the Indian stock market in droves over the past year due to uncertainty around the India-US trade deal, weak earnings and high valuations. FPIs clocked a net outflow of ₹1.66 trillion from the equities market in 2025, against inflows of ₹427 crore in 2024, according to data from the National Securities Depository Ltd. Foreign investors have pulled out ₹35,962 crore net from Indian equities so far in 2026.
Markets saw this as a step towards reducing external uncertainty, even as foreign investor flows into Indian equities remain volatile. Despite the reduction of external uncertainty, Pandey said foreign investors may also look at the risk-return dynamic in Indian capital markets before deciding whether to re-enter. “FPIs (foreign portfolio investors) and FIIs (foreign institutional investors), they have their own decision, when they go, how they come, and in what return they go,” said the Sebi chief. He added that the trade deal could also lead to “salutary movements on the exchange rate, which also bring in stability and predictability”.
Foreign investors have been exiting the Indian stock market in droves over the past year due to uncertainty around the India-US trade deal, weak earnings and high valuations. FPIs clocked a net outflow of ₹1.66 trillion from the equities market in 2025, against inflows of ₹427 crore in 2024, according to data from the National Securities Depository Ltd. Foreign investors have pulled out ₹35,962 crore net from Indian equities so far in 2026.
