In a promising development for Indian equities, foreign investors pumped in a net $106 million last week—the first positive inflow in seven weeks—following a grueling period of capital flight. Elara Capital’s latest analysis sheds light on this pivotal moment in market dynamics.
Preceding this, India had bled close to $5 billion over six weeks, driven by heavy selling in India-centric funds. The good news? Outflows have tapered off dramatically, shrinking from $1.2 billion highs to just $180 million, easing the bearish overhang.
ETFs emerged as the heroes of the hour, mopping up $220 million, even as long-only funds leaked $400 million. U.S. funds, notorious for recent sell-offs totaling $3.3 billion across seven weeks, flipped to buyers with a hefty $225 million commitment.
That said, dedicated India strategies are still in the red for nine weeks running, reflecting selective risk aversion. Globally, the liquidity tap stayed open, with U.S. equities feasting on $10-22 billion weekly over the last month and global funds securing $16 billion.
GEM funds clocked consistent $2 billion inflows, and EM growth funds added $1.4 billion. Meanwhile, Europe and China grapple with five-week outflow streaks. Commodities cooled off post-rally, energy outflows moderated, gold steadied, and silver lagged.
As investors parse these trends, India’s bounce-back could herald a broader emerging market thaw, bolstered by stabilizing global cues and domestic growth prospects.
