Foreign Investors Pull $8.5 Billion from India-Focused Funds, Reversing More Than Half of Inflows Since 2023

Foreign investors have withdrawn $8.5 billion from India-focused equity funds so far in 2026, according to Elara Securities' Global Liquidity Tracker.  

The outflow has reversed nearly 55% of the money that entered these funds between March 2023 and October 2024. The report noted that funds based in Luxembourg and Japan accounted for a large part of the withdrawals.  

Redemptions have increased since the start of the year as global investors adjusted allocations across markets. 

Capital Moves Towards US Equities 

At the same time, US equity funds have continued to attract fresh investments. During the latest reported week, inflows into US equities reached $120 billion, driven mainly by exchange-traded funds (ETFs). 

Around $50 billion was invested in three S&P 500-linked ETFs. US mid-cap ETFs received a record $20 billion, while small-cap ETFs attracted $12.3 billion, marking their strongest weekly inflows since June 2007. Technology-focused funds also recorded inflows of $19.2 billion. 

Emerging Market Flows Remain Uneven 

Overall outflows from emerging market funds slowed to $570 million, compared with roughly $3 billion in each of the previous 2 weeks. However, flows varied significantly across countries. 

South Korea attracted $1.3 billion and Taiwan received $600 million after 6 weeks of weakness. According to the report, the 2 markets now account for around 52% of the benchmark emerging market index, reflecting their growing weight in global portfolios. 

India and China Continue to See Outflows 

While some Asian markets recorded fresh inflows, India and China remained under pressure. India registered outflows of $440 million, while China saw withdrawals of $1.7 billion during the period under review. 

Brazil and Mexico also continued to witness redemptions. The report linked recent fund movements to changes in global sector preferences and portfolio positioning across emerging markets. 

Precious Metals Funds Face Withdrawals 

Investor withdrawals extended beyond equities. Precious metals funds recorded outflows of $3 billion, the highest level in 12 weeks. Total withdrawals from the category have reached $18 billion since March. 

Read More: World Bank Approves $1.5 Billion to Boost India's Employment and Business Sectors! 

Conclusion 

Recent fund flow data shows a continued withdrawal of foreign capital from India-focused equity funds. More than half of the inflows recorded between 2023 and 2024 have now been redeemed as investors reallocated money across global markets. 

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