India Blames $33 Billion Equity Outflows for 12% Market Slide as AI Trade Draws Capital Away
Updated
Updated · CNBC · Oct 18
India Blames $33 Billion Equity Outflows for 12% Market Slide as AI Trade Draws Capital Away
1 articles · Updated · CNBC · Oct 18
Summary
India's finance minister said excess liquidity is worsening equity-market underperformance by making it easier for investors to exit, even as she described the broader economy's fundamentals as sound.
$33 billion in foreign portfolio sales this year and nearly 12% declines in benchmark indexes since January underscore the pressure, with Sitharaman calling continued capital outflows one of India's biggest risks for 2027.
Domestic money is still flowing in: Indian equity mutual funds have logged net inflows every month since March 2021, but IPOs have also enabled large premium exits for existing holders.
$37.7 billion of the $60.4 billion raised in Indian IPOs from 2021 to 2025 went to selling shareholders, while capital has shifted toward AI-heavy markets such as Taiwan and Korea and to the U.S.
India's weighting in MSCI Asia Pacific ex-Japan has shrunk to 10% from 19% a few years ago, though Sitharaman said any crack in the global AI rally would not materially hurt India.