Stories
India Stock Market Underperformance Stabilises Even As Foreign Outflows Persist
- •India's stock market relative performance against emerging markets bottomed out in June 2026 and has stabilized, according to Elara Capital.
- •India-focused funds recorded average weekly outflows of $420 million over the past four weeks, with US-based funds leading the selling.
- •Global equity funds rebounded strongly, attracting $65 billion in the latest week led by a recovery in the US and emerging markets.
- •Global investment trends show a shift away from industrial-focused funds while technology funds continue to attract robust weekly inflows.
Key Questions Answered
Foreign investors continue to withdraw money from India-focused funds despite the market's relative underperformance bottoming out and stabilising since June 2026. Some of these recent outflows may reflect a broader pullback from emerging markets as a whole, with US-based and Ireland-based funds acting as the biggest sellers.
The recovery in global equity flows was led by the US, which attracted $40 billion in the latest week following previous outflows. Emerging market funds also turned positive with $378 million in inflows, while South Korea and Taiwan recorded continued foreign investments, and Brazil saw strong multi-week inflows.
Industrial-focused funds have started seeing sustained outflows for the first time since the artificial intelligence investment boom began in May 2025. This shift suggests investors are moving away from broader businesses associated with the AI boom rather than core technology companies and cloud-computing hyperscalers, which continue to attract significant inflows.
