FIIs Cautious on India: Earnings Must Catch Valuations, Says Kotak Life CIO

• Radhavi Deshpande, CIO at Kotak Mahindra Life Insurance, states FIIs are valuation-sensitive and will remain cautious on Indian equities in the short term.
• Meaningful FII participation requires domestic earnings growth to catch up with elevated market valuations.
• The Union Budget is unlikely to see a major jump in capital expenditure, with growth expected to track nominal GDP.
• Job creation will remain a key priority, focusing on infrastructure, manufacturing, and welfare schemes.
• Despite strong domestic fundamentals, caution is advised due to global headwinds, uneven earnings recovery, and high valuations in some market segments.

Why It Matters: FIIs will return to India only when earnings justify current valuations; Budget capex growth will be modest.