Headwinds faced in 2024 are now tailwinds, says this fund manager, sees FIIs returning to India
Vaibhav Chugh, the CEO of Abakkus Mutual Fund points growth is now happening in many new sectors, and investors need to look at investments in such future-ready companies.
- Aug 14, 2026,
- Updated Aug 14, 2026 5:10 PM IST
Indian equity market was among the worst performers in 2025 and things haven’t been much better in 2026, with the BSE Sensex declining over 8 per cent year-to-date and the NSE Nifty50 down around 7 per cent. As such, since around the end of 2024, domestic investors wouldn’t have made significant equity returns, even as several global markets rallied massively. Are things about to get better? Vaibhav Chugh, the CEO of Abakkus Mutual Fund notes that the headwinds Indian markets faced in 2024 have in fact now turned into tailwinds for the market recovery. “In 2024, the reasons for which FIIs started pulling out, most of those things are already behind us. We were the top performing market with very low earnings visibility. Market was expensive, and the AI play had also started. Now, we are the least performing market and have one of the best earnings visibility. So, that has turned around. Most of the AI play has also played out,” noted Chugh. Over the last 18-odd months, foreign portfolio investors massively pulled out from India’s stocks, worried over the expensive valuations, global trade and geopolitical uncertainty, and also attracted by AI-related investment themes in other markets. So far in 2026, FPIs have sold Rs 2.38 lakh crore worth in the equity market. This is on the top of Rs 1.66 lakh crore they offloaded in 2025. But, there are signs FPIs may have begun to relook at the Indian market again. In July 2026, FPIs invested Rs 20,200 crore in the equity market. Additionally, they have been net buyers worth Rs 16,270 crore this month up to August 13. Chugh believes that FIIs will return now that stock prices have corrected a lot and there is also earnings visibility. However, their approach may well be selective right now. “They have started looking at India for sure. We are getting queries. We are also getting some money in our offshore funds. But, they are also very selective and its not like they will pick anything and everything. They are finding good companies, where there is comfort in earnings and valuations,” he told Business Today. Chugh points that there is growth now happening in many new sectors and investors need to look at presence in such future-ready companies. “Growth in India is now happening in many new sectors, like electric vehicles, cyber security, medical tourism and lifestyle… Quick Commerce, QSRs (quick service restaurants), these are now part of our life. This is where the next India is growing. Structurally if you are not present there, in future you may underperform,” he said. Abakkus, founded by veteran investor Sunil Singhania, is among the newer asset managers in India’s rapidly growing mutual fund industry. It launched its first new fund offer in December 2025. Under the mutual fund, it currently offers four schemes – flexi cap, large and mid cap, small cap and liquid. Its average AUM for the April-June quarter stood at around Rs 5,580 crore, according to data from Association of Mutual Funds of India. The company is selective in its investments, following a bottoms up stock selection, based on the MEETS (management, earnings, events and trade, timing and structural) framework. “We are investors and not allocators. So, we don’t take top-down calls and are pure bottoms up stock pickers. We also don’t chase momentum. We are very averse to that,” stated Chugh. The fund house seeks companies that are seeing strong earnings growth, typically earnings doubling in four-five years, he pointed. “We like those companies where the earnings growth is better than nominal GDP. Also, at times we see the price to earnings ratio going up or down due to specific events, like the West Asia crisis and the closure of the Hormuz strait that we saw. You have to monitor whether there is a movement in the stock due to such event or is there any fundamental issue. That has to be captured,” he stressed. Looking ahead, Abakkus plans to file for a balanced advantage fund, aggressive hybrid and arbitrage fund. It has also filed papers for launching SIF (specialised investment fund). According to latest data released by AMFI, net assets under management of the mutual fund industry stood at Rs 85.76 lakh crore at the end of July 2026, compared with Rs 82.22 lakh crore in June 2026. The growth was aided by strong inflows in debt funds, while net inflows into equity funds declined around 15 per cent to Rs 24,685 crore in July, from Rs 28,961 crore in June. The mutual fund industry has seen several new players enter the market in the last 3-4 years and currently there are 55 operational AMCs. Chugh says the mutual fund industry has a long way to go. “We haven’t even crossed the tip of the iceberg. From the time I started my career, the AUM has grown like 30-40 times. But, the number of AMCs has only doubled. Secondly, there are around 6.2 crore unique mutual fund investors in a population of 140 crore. Assuming there are 50 crore who want to invest, and even if you can reach 20 crore, there is still a lot of work to be done,” he pointed.
Indian equity market was among the worst performers in 2025 and things haven’t been much better in 2026, with the BSE Sensex declining over 8 per cent year-to-date and the NSE Nifty50 down around 7 per cent. As such, since around the end of 2024, domestic investors wouldn’t have made significant equity returns, even as several global markets rallied massively. Are things about to get better? Vaibhav Chugh, the CEO of Abakkus Mutual Fund notes that the headwinds Indian markets faced in 2024 have in fact now turned into tailwinds for the market recovery. “In 2024, the reasons for which FIIs started pulling out, most of those things are already behind us. We were the top performing market with very low earnings visibility. Market was expensive, and the AI play had also started. Now, we are the least performing market and have one of the best earnings visibility. So, that has turned around. Most of the AI play has also played out,” noted Chugh. Over the last 18-odd months, foreign portfolio investors massively pulled out from India’s stocks, worried over the expensive valuations, global trade and geopolitical uncertainty, and also attracted by AI-related investment themes in other markets. So far in 2026, FPIs have sold Rs 2.38 lakh crore worth in the equity market. This is on the top of Rs 1.66 lakh crore they offloaded in 2025. But, there are signs FPIs may have begun to relook at the Indian market again. In July 2026, FPIs invested Rs 20,200 crore in the equity market. Additionally, they have been net buyers worth Rs 16,270 crore this month up to August 13. Chugh believes that FIIs will return now that stock prices have corrected a lot and there is also earnings visibility. However, their approach may well be selective right now. “They have started looking at India for sure. We are getting queries. We are also getting some money in our offshore funds. But, they are also very selective and its not like they will pick anything and everything. They are finding good companies, where there is comfort in earnings and valuations,” he told Business Today. Chugh points that there is growth now happening in many new sectors and investors need to look at presence in such future-ready companies. “Growth in India is now happening in many new sectors, like electric vehicles, cyber security, medical tourism and lifestyle… Quick Commerce, QSRs (quick service restaurants), these are now part of our life. This is where the next India is growing. Structurally if you are not present there, in future you may underperform,” he said. Abakkus, founded by veteran investor Sunil Singhania, is among the newer asset managers in India’s rapidly growing mutual fund industry. It launched its first new fund offer in December 2025. Under the mutual fund, it currently offers four schemes – flexi cap, large and mid cap, small cap and liquid. Its average AUM for the April-June quarter stood at around Rs 5,580 crore, according to data from Association of Mutual Funds of India. The company is selective in its investments, following a bottoms up stock selection, based on the MEETS (management, earnings, events and trade, timing and structural) framework. “We are investors and not allocators. So, we don’t take top-down calls and are pure bottoms up stock pickers. We also don’t chase momentum. We are very averse to that,” stated Chugh. The fund house seeks companies that are seeing strong earnings growth, typically earnings doubling in four-five years, he pointed. “We like those companies where the earnings growth is better than nominal GDP. Also, at times we see the price to earnings ratio going up or down due to specific events, like the West Asia crisis and the closure of the Hormuz strait that we saw. You have to monitor whether there is a movement in the stock due to such event or is there any fundamental issue. That has to be captured,” he stressed. Looking ahead, Abakkus plans to file for a balanced advantage fund, aggressive hybrid and arbitrage fund. It has also filed papers for launching SIF (specialised investment fund). According to latest data released by AMFI, net assets under management of the mutual fund industry stood at Rs 85.76 lakh crore at the end of July 2026, compared with Rs 82.22 lakh crore in June 2026. The growth was aided by strong inflows in debt funds, while net inflows into equity funds declined around 15 per cent to Rs 24,685 crore in July, from Rs 28,961 crore in June. The mutual fund industry has seen several new players enter the market in the last 3-4 years and currently there are 55 operational AMCs. Chugh says the mutual fund industry has a long way to go. “We haven’t even crossed the tip of the iceberg. From the time I started my career, the AUM has grown like 30-40 times. But, the number of AMCs has only doubled. Secondly, there are around 6.2 crore unique mutual fund investors in a population of 140 crore. Assuming there are 50 crore who want to invest, and even if you can reach 20 crore, there is still a lot of work to be done,” he pointed.