Despite a surge in global equity market liquidity, India is experiencing a significant exodus of foreign capital. Market expert Sandip Sabharwal recently highlighted this striking divergence, pointing out that India's domestic market has recorded Foreign Portfolio Investor (FPI) outflows amounting to $21 billion year-to-date in 2026.
Sabharwal shared his analysis on a social media platform, stating, "Interesting data highlighting how out of favour India currently is with global investors." This comes at a time when global equity funds have attracted over $210 billion in the last six months alone, marking the strongest six-month stretch of inflows on record.
Global Inflows Contrast with Indian Outflows
The broader optimism in global markets extends even to emerging economies. Emerging Market (EM) exchange-traded funds (ETFs) have seen substantial inflows, raking in $35 billion so far in 2026. However, India's market presents a completely different picture, facing persistent selling pressure from foreign investors.
The market expert underscored the unusual nature of this capital flight from India. "I cannot recall seeing such a sharp divergence between flows into India and the broader EM basket," Sabharwal remarked. This indicates a unique challenge for the Indian economy and its investment appeal on the global stage.
Call for Official Evaluation
Given the significant FPI outflows, Sabharwal suggested that the Ministry of Finance and the Prime Minister's Office "may need to closely evaluate the reasons behind this trend and consider corrective measures." The sustained withdrawal of foreign capital could have broader implications for India's market stability and economic growth prospects.
The situation highlights a critical period for policymakers to understand and address the factors contributing to India's current standing with international investors, especially when other global markets are benefiting from record liquidity.