EXPERTS ATTRIBUTE INDIA’S FPI OUTFLOWS TO GLOBAL MARKET FACTORS, NOT AI GAP

September 28, 2026

Foreign portfolio investors’ recent withdrawal of funds from Indian equities is not primarily being driven by India’s comparatively limited artificial intelligence presence, according to capital-market experts cited at the ICBI Wealth Summit. They attributed the selling largely to broader movements in emerging markets and changing global financial conditions.

Samir Arora, founder and group CIO of Helios Capital, cited Goldman Sachs data suggesting that the recent FPI outflows represent a wider emerging-market trend rather than a movement of capital specifically from India towards AI-focused economies. Foreign investors have also been responding to factors including US interest rates, bond yields, crude oil prices and currency movements.

Foreign investors had returned to Indian equities in July and August, investing about ₹20,200 crore and ₹29,630 crore respectively, before selling resumed in September. Data reported earlier this month showed withdrawals of nearly ₹21,000 crore from Indian equities through September 18.

Market participants have offered differing explanations for the recent trend. While some analysts have pointed to India’s relatively limited exposure to the global AI investment cycle, others have highlighted higher US yields, elevated crude prices, geopolitical uncertainty and pressure on the rupee as more immediate factors influencing foreign capital flows.

The debate comes as foreign investment flows remain volatile, with investors continuing to assess relative returns and risks across emerging and developed markets.