Shift in Foreign Investment: India at a Crossroads
Foreign investors have started withdrawing significant capital from Indian markets since early 2025, shifting from long-term active funds to passive ETFs. This trend follows changes in global sentiment, particularly influenced by U.S. political developments. While foreign investors hold about $980 billion in Indian assets, the reduction in active fund participation raises concerns about their confidence in India's growth. The movement towards ETFs indicates a risk-averse approach, reflecting uncertainty about India's economic fundamentals. As emerging market funds pivot towards countries like China, it highlights a strategic shift that could impact India's market stability.
