New Delhi: Overseas investors now own the smallest share of Indian stocks in nearly 15 years, causing domestic funds to step in. The factories are busy, but the money behind the market is changing hands. Reports highlight what is ailing the Indian economy right now.Manufacturing growth eases on softer domestic demandIndia’s manufacturing output growth slowed in October as domestic demand softened, even as export orders grew at their fastest pace in six months, according to a report by Gyanendra Keshri in the Deccan Herald. The report draws on an industry survey that S&P Global released on November 2. The Purchasing Managers’ Index (PMI) for manufacturing fell to 54.7 in October from 55.1 in September, the report says. A reading above 50.0 signals expansion, and a value below it indicates contraction.Growth in output and new orders slowed month on month, but the index stayed above its long-run average. S&P Global said growth eased only marginally from September’s seven-month high and remained strong by historical standards. Firms kept adding jobs and building inventories, though hiring was subdued. Business confidence slipped from September and stayed below its long-run average.Pranjul Bhandari, chief India economist at HSBC, said strong international demand pushed new export orders to a six-month high. Producers raised input inventories by the most in eight months to guard against shortages in a volatile global environment, she said. Foreign ownership of Indian stocks hits a 15-year lowThe Wire has reported on how FPIs have withdrawn Rs 3.08 lakh from Indian markets in 2026.Now, a Mint report by Mayur Bhalerao notes how foreign investors’ ownership of Indian equities fell to its lowest level in nearly 15 years in the September quarter, even though they returned as net buyers. Mint’s analysis of 5,638 BSE-listed firms, using data from the Centre for Monitoring Indian Economy (CMIE), showed FPIs held 14.02% of shares at the end of September, the lowest since December 2011. Their share fell nearly 0.4 percentage points in the quarter and 154 basis points over the year, and is 6.07 percentage points below its December 2020 peak of 20.09%.FPIs invested a net Rs 13,970 crore in the September quarter, after withdrawing Rs 1.43 trillion in the June quarter and Rs 1.31 trillion in the March quarter. Their net outflows for 2026 stand at Rs 2.9 trillion. In the last week of October, FPIs bought stocks worth more than Rs 14,000 crore but remained net sellers for the month, pulling out Rs 34,843 crore, according to NSDL data. DIIs put a net Rs 1.7 trillion into Indian equities in the September quarter, and domestic mutual funds’ shareholding rose to a new high of 11.59%, narrowing the gap with FPI ownership to 2.43 percentage points from 4.77 a year earlier.Mayur Shah, head of portfolio management services (PMS) at Anand Rathi Advisors, attributed the decline to higher US bond yields, a stronger dollar, geopolitical uncertainty and valuation concerns. Earnings growth has not always kept pace with valuations, particularly among largecaps, he said. The valuation gap is wide: the MSCI India index trades at 16.59 times one-year forward earnings, against 7.54 times for the MSCI Emerging Markets index. Corporate performance, however, remains robust, with 188 companies that have announced September quarter results reporting aggregate revenue growth of 21.64% and net profit growth of 22.43% year on year.Mint’s analysis of 100 largecaps, using ACE Equity data, found that FPIs cut their stakes in 57% of them in the September quarter and raised them in 42%, while domestic mutual funds increased holdings in 55%. Midcaps were the only segment where foreign increases outnumbered decreases, at 49% against 45.6% of the 147 firms analysed. Vishad Turakhia, chief executive of Equirus Securities, was quoted as having said the issue was “not necessarily a loss of confidence” in India’s growth story, but that foreign investors were becoming more selective about the price they pay for it. A fall in stock prices alone may not bring them back, he said, without earnings upgrades and better returns on capital. In the quarter, the BSE largecap index fell 3.46% and the midcap index fell 2.15%, while the smallcap index gained 8.51%.Foreign appetite for IPOs hits a five-year lowForeign investors are growing cautious about India’s initial public offerings (IPOs), Apoorva Ajith reports in Mint, citing concerns about rich valuations, weak market performance and a global shift of interest towards artificial intelligence (AI). The share of foreign portfolio investors (FPIs) in the anchor book fell to 36.16% so far this year. An anchor book represents the pool of institutional money committed exactly one day before an IPO opens to the public.An anchor book represents the exclusive portion of an IPO reserved for large institutional buyers, who make anchor investments by committing substantial capital to purchase shares exactly one day before the public bidding opens. That is its lowest in five years, down from a peak of 62.75% in 2021, according to Prime Database. The previous low was 37.85% in 2022. FPIs’ share of total IPO fundraising has more than halved from its 2021 level to 11.61%, another five-year low.Of the 104 domestic institutional investors that entered the primary market in 2026, raising a combined Rs 1.55 trillion, anchor investors contributed Rs 49,771 crore, of which FPIs accounted for Rs 17,998 crore. In 2021, companies raised Rs 1.19 trillion, and FPIs contributed Rs 29,059 crore of a total anchor book of Rs 46,312 crore. Foreign investors are also pulling back from the secondary market, where the Nifty 50 has fallen about 12% this year amid geopolitical tensions, high crude oil prices, rising global bond yields and a stronger US dollar. Foreign holdings in India’s top companies keep fallingOverseas investors’ holdings in nearly 70% of India’s top 100 companies are at multi-year lows after two years of selling blue-chip stocks, according to a report by Ravindra Sonavane and Shailesh Kadam in The Economic Times. The fall has been broad-based but sharper in the largest companies, especially banks and information technology firms. Foreign ownership in Godrej Consumer Products, Jindal Steel, Maruti Suzuki, Dr Reddy’s Laboratories, Adani Enterprises, HCL Technologies and Tata Consultancy Services (TCS) has dropped to levels not seen in more than two decades.Holdings in another 10 companies, among them DLF, Reliance Industries, Bajaj Holdings & Investment, UltraTech Cement, Kotak Mahindra Bank, Axis Bank, Trent, Eicher Motors, Britannia Industries and Shriram Finance, are at more than 15-year lows. Figures compiled by ETIntelligence.com show the foreign stake in Infosys at 25.1% on September 30, 2026, the lowest since March 2001 and down from 30.1% in September 2024, when FPIs began selling. Godrej Consumer’s foreign stake halved to 11.0% from 22.0% over the same period, while Axis Bank’s fell to 38.1% from 49.4%.Rahul Bhutoria, director and co-founder of Valtrust Capital, a New Delhi-based portfolio manager, is quoted as having described the decline as a repricing of growth prospects as global investors moved money to markets with stronger earnings growth.