Home / Business and Economy / India Stocks Lag Asia Amid Foreign Capital Flight
India Stocks Lag Asia Amid Foreign Capital Flight
26 Aug
Summary
- Foreign investors sold $25.1 billion of Indian shares this year.
- India's currency is among Asia's worst performers against the dollar.
- Domestic investors are stepping in to support the market.
As of August 26, 2026, India's stock market is projected to perform lower by mid-2027 compared to the start of 2026, according to a Reuters poll. This marks the third consecutive quarter analysts have lowered their outlook.
Foreign investors have sold approximately 2.4 trillion rupees ($25.1 billion) of Indian shares this year, opting for cheaper or AI-focused opportunities in other Asian markets. This outflow has significantly weakened the Indian rupee, making it one of Asia's worst-performing currencies, and elevated crude oil prices are further deterring overseas investment.
Despite India's economy growing close to 8% in previous fiscal years and Nifty 50 companies reporting robust profit growth, the market's performance is a stark outlier in the region. Analysts point to a lack of direct AI exposure as a key reason for India lagging.
However, domestic investors are increasingly supporting the market. Systematic investment plans contributed over 319.61 billion rupees in July, a tenfold increase from a decade ago, helping to cushion the decline.
