Foreign Institutional Investors (FIIs) are reducing their investments in Indian stocks primarily due to disappointing corporate earnings, rather than shifting their investments to the US or China, according to Samir Arora, founder of Helios Capital.

Speaking at the CNBC-TV18 Global Leadership Summit in Mumbai, Arora stated that the prevailing narrative suggesting a shift away from China due to geopolitical tensions may not be accurate. He pointed out that global investors typically have minimal exposure to India, averaging around 1%, compared to approximately 60% in US markets, making significant reallocations unlikely.

Arora also mentioned that weak earnings are expected to continue for the next three months, with a recovery anticipated in six to nine months. He addressed the potential impact of the newly elected US president, stating that there is no reason for Indian markets to have a negative outlook. While underperformance relative to US markets may occur, he emphasized that this should not discourage investors.