India’s finance minister says market liquidity makes it easier for investors to exit — SkimNews
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Nirmala Sitharaman told CNBC that India's high equity market liquidity lets foreign portfolio investors "exit easily," despite benchmark indexes slipping nearly 12% since January on record foreign outflows.
- Foreign portfolio investors have sold over $33 billion in direct Indian equities so far this year, with India viewed by some portfolio managers as an "anti-AI trade."
- Indian equity mutual funds have posted net inflows every month since March 2021, backstopping the market even as foreign capital has fled.
- Indian IPOs from 2021–2025 raised $60.4 billion, of which $37.7 billion (63%) went to existing shareholders cashing out to public investors at premium valuations, per an August EY report.
- Sitharaman flagged fuel, fertilizer, and capital flow as the biggest risks for the Indian economy in 2027, calling the flight of capital toward AI and the U.S. "a concern."
- India's MSCI Asia Pacific ex-Japan weight has compressed from 19% to 10%, overtaken by Taiwan at 29% and Korea at 22%, per a Goldman Sachs report dated Oct. 8.
Why it matters: India is shedding index weight — its MSCI Asia Pacific ex-Japan share has halved to 10% while Taiwan and Korea captured the AI-driven flows — but domestic retail money has backstopped the market with 50+ consecutive months of mutual fund inflows, meaning foreign investors can exit at premium IPO valuations while locals absorb the selling pressure.
Ask SkimNews
