Indian investors are increasingly moving money abroad, driven by weaker domestic market returns, ongoing foreign fund outflows, and the rupee sliding to record lows. Overseas investments in equities and debt jumped 60% year-on-year to more than $2.2 billion in the 11 months through February, signaling a growing push for diversification outside India.
Foreign Institutional Investors have pulled a record ₹1.92 lakh crore from Indian equities in the first four months of 2026, already exceeding total outflows for all of 2025. Analysts point to a global risk off mood driven by geopolitical tensions in West Asia, rising US bond yields, a stronger dollar, and concerns over elevated domestic valuations. Markets now hinge on how long domestic support holds.
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Debt mutual funds logged record outflows of Rs 2.9 lakh crore in March, driven by sharp redemptions in overnight funds. Overnight funds saw redemptions of Rs 40,227 crore, followed by money market funds with Rs 29,207 crore outflows and low-duration funds posting Rs 25,227 crore in withdrawals. The figures underline rising investor caution in the debt space.
PSU mutual funds recorded Rs 4,498 crore in outflows in March, a modest improvement from February, per Vallum Capital. Despite solid long-term performance, sector flows were uneven: consumption saw withdrawals, while manufacturing, infrastructure, defence and pharma pulled in fresh money—hinting investors are rotating toward domestic capex themes even as broader sentiment stays cautious.
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