According to CNBC, Bernstein said foreign investors have little reason to invest in India because large corporates are struggling to reinvent their businesses amid disruption from new technologies. The brokerage said many of India’s large caps represent a bygone economic era and do not offer high growth rates that can justify the sky-high valuations of Indian markets. It added that most large corporates are not investing in the future and are instead consolidating their past, while the deepest-pocketed firms are reluctant to provide capital for emerging technologies such as electric vehicles and semiconductors.

Foreign investors resumed selling Indian equities in September after a brief pause in July and August, according to depository firm NSDL. So far this month, foreign portfolio investors have sold direct Indian equities worth $1.7 billion, bringing the total sold this year to nearly $26 billion, the highest ever. Since January, the Nifty 50 has fallen more than 10%, making it one of the world’s worst-performing markets, even as India remains the fastest-growing major economy. Bernstein also said small and mid-cap companies have promise but are not ideal for large institutional capital because they remain sub-scale, with low free floats, limited liquidity and sparse coverage.