Global Funds Flee Indian Stocks at Record Pace on Growth Fears

07i{2{1wqxok0]no1nuq9jw6_media_dl_1.png BloombergArticle content(Bloomberg) — Global funds are dumping Indian equities at a record clip as an energy shock from the US-Iran war threatens to derail the outlook of the world’s fastest-growing major economy.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentIn just over three months, they have pulled $18.84 billion from local shares, edging past the full-year record outflow of $18.79 billion seen in 2025, according Central Depository Services India Ltd. The sustained selling has kept markets under pressure, and even a modest rebound following a temporary ceasefire earlier this week has done little to lift the mood. Local shares remain bruised, with over $600 billion wiped off their value from last year’s peak.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentIndia’s $4.8 trillion equity market is losing some of its relative appeal, as global capital rotates toward artificial intelligence-linked economies where semiconductor demand is the bigger driver. The oil crisis has magnified existing concerns for the country — from recent rupee volatility to a still-fragile earnings recovery — while also underlining another problem: a lack of a clear catalyst to bring foreign money back.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article content“Indian stocks are missing a narrative,” said Abhishek Thepade, an Oslo-based portfolio manager with DNB Asset Management AS. “Earnings are undergoing a cyclical slowdown while weakening currency and impact of artificial intelligence on local software companies also impacts the outlook.”Article contentAlthough tech-heavy South Korea and Taiwan saw larger headline outflows in March — totaling $24 billion and $29 billion respectively — the peace deal may given them a stronger boost by refocusing investor attention on AI-driven chip demand, a factor largely absent in India.Article contentThat gap is already showing up in flows. South Korean and Taiwanese equities have seen inflows of $3.6 billion and $5.6 billion, respectively, so far this month. In contrast, global funds have pulled $3 billion from Indian equities, data compiled by Bloomberg show. Article contentArticle contentTo be sure, domestic money continues to cushion the blow. Mutual funds and institutions have poured in $31 billion this year, with retail investors doubling down via record inflows into monthly equity investment plans last month even amid heightened volatility. Still, that support has not been enough to counter persistent foreign selling.Article contentSome investors see scope for a reversal once the Middle East tensions ease. “Now that India’s valuations have become reasonable, foreign flows could return once the current geopolitical uncertainty settles, though the timing remains uncertain,” said Harsha Upadhyaya, chief investment officer for equities at Kotak Mahindra Asset Management Co.Article contentStill, a steady retreat by global funds has led to more than $34 billion of outflows from Indian equities over the past two years through March — a period that’s seen MSCI Inc.’s India gauge trail regional peers in all but two of the past eight quarters. The Nifty 50 Index is down 8% this year, while the foreign exodus had recently pushed the rupee to record lows, forcing the central bank to step in to stabilize the currency.Article contentEven after a recent moderation, valuations remain a sticking point. The Nifty 50 remains expensive relative to emerging-market peers, BofA Securities said in a note this week, adding it expects India to lag behind rivals. Article contentTrending Posthaste: More Canadians desperate for tax refund to plug holes in their finances News This TSX oilsands major could jump as much as 20% on the Iran war and Strait of Hormuz crisis, analyst says Investor Bank of Canada rate hike bets look 'unrealistic' given 'sclerotic' state of jobs market, say economists Economy Facing the loss of government disability benefits, Ian wonders if CPP, OAS and a small inheritance will be enough Personal Finance BYD to open 20 car dealerships in Canada this year Autos Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. Posthaste: More Canadians desperate for tax refund to plug holes in their finances News This TSX oilsands major could jump as much as 20% on the Iran war and Strait of Hormuz crisis, analyst says Investor Bank of Canada rate hike bets look 'unrealistic' given 'sclerotic' state of jobs market, say economists Economy Facing the loss of government disability benefits, Ian wonders if CPP, OAS and a small inheritance will be enough Personal Finance BYD to open 20 car dealerships in Canada this year Autos