Lack of AI companies and attractive valuations drives record foreign investor outflows from Indian stock market

Golden Ten Data, May 12 — According to the Financial Times, over the past two months, investors have withdrawn 2 trillion rupees (approximately 21 billion USD) from the Indian stock market. This makes this year the worst in terms of foreign capital flows since the Indian market opened to overseas investment in 1993. The massive sell-off amounting to 2.06 trillion rupees this year comes on top of last year's net sell-off of 1.66 trillion rupees for the entire year. According to a report from brokerage firm JM Financial, the proportion of foreign holdings in the Indian stock market has now fallen to 14.7%, a 14-year low. The Indian market's valuation still lacks appeal, with emerging market funds mainly flowing into South Korean and Taiwanese stocks, as semiconductor giants are profiting from the artificial intelligence boom. Although most of the funds are concentrated in only a few companies, these enterprises wield considerable weight in the capital markets and have significant strategic influence in the AI industry. In contrast, the development of the Indian market is clearly restricted due to the current lack of representative leading AI concept companies. The sell-off is not limited to foreign investors; since March 2025, the number of stocks held by Indian retail investors has also fallen by 9.2%.