New Delhi, Aug. 21 -- India may be nearing a turnaround in foreign investor sentiment, with foreign institutional investor (FII) inflows returning in July after months of heavy outflows, while market valuations have moved closer to their long-term averages, Jio BlackRock Asset Management said in its August macroeconomic outlook.

The report said the reduction in foreign outflows in June and the return of FII inflows in July suggest that the worst of the foreign investor withdrawal may be behind the market, with early signs of improving sentiment emerging.

Foreign investor flows into India are near historical lows, but the report noted that similar lows in the past were followed by a recovery in flows and markets. This suggests that much ...