Finance Minister Sitharaman said abundant market liquidity and easy investors
exit options have contributed to the underperformance of Indian equities and
that the effect may persist. LSEG data show India’s main benchmark is down
nearly 12% YTD. NSDL figures indicate foreign investors have net sold over $33bn
of Indian equities this year. Indian equity mutual funds have recorded monthly
net inflows since Mar 2021, which has facilitated exits by existing
shareholders. An Ernst & Young report finds IPO proceeds from 2021–25 totaled
$60.4bn, of which $37.7bn (63%) went to selling shareholders rather than company
financing. Sitharaman added that global capital is increasingly concentrated in
the US and AI-related sectors, weighing on India, but noted India has not
attracted large AI investment and would likely avoid severe spillovers if an AI
bubble bursts.
