Brokerage firm Citi has cut down its rating on Indian equities to ‘neutral’ from ‘overweight’, pointing to expensive valuations and weaker earnings growth forecasts.“India remains most expensive market (23 times) vs both its peers and its own average valuation,” the firm said in a note, even as it acknowledged that India’s macroeconomic story is stronger than many of its peers and a favourable US trade deal is possible, ET cited the firm.However, it believes the outlook for earnings growth is “no longer exceptional” given the current market levels.Citi continues to prefer China, Korea, and the Philippines, citing better earnings revision trends and more attractive valuations in those markets.Within India, Citi favours banks, NBFCs, healthcare, and telecoms, but maintains an underweight stance on IT services, metals, and consumer staples.“A turnaround in FII sentiment (relatively favorable trade deal with US, consumption growth recovery, etc., could aid) could support valuations/performance,” the firm added.Meanwhile, Foreign Institutional Investors (FIIs) have intensified their selling activities in Indian equity markets, with net outflows occurring across five successive trading sessions. During this short but significant period, FIIs have pulled out Rs 10,169 crore, exceeding $1 billion in total sales. These figures incorporate the substantial outflow observed on July 17.The largest withdrawal was witnessed on July 17, with FIIs offloading Rs 3,671 crore, representing the second-highest single-day outflow within the recent five sessions. The most substantial single-day withdrawal amounted to Rs 4,495 crore, highlighting the considerable scale of FII departures from the market.