FII selloff, Aug. 25 -- Foreign institutional investors (FIIs) have sold Indian stocks worth $12.8 billion on a year-to-date (YTD) basis, signalling a shift to other markets offering better risk-reward setups.

Despite the macroeconomic setup remaining steady, the Indian earnings momentum is clearly lagging. This moderation in sentiment is already reflected in fund flows.

According to Elara Capital, FIIs are likely dumping Indian stocks for other emerging markets like South Korea, Taiwan, and China, where tailwinds, earnings upgrades, and cheaper valuations provide a much better value-growth proposition.

"The Nifty index delivered just 4% YoY USD EPS growth-placing it in the mid to bottom quartile among global markets. Yet, India trades...