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AI driven rotation sees over half of India focused equity inflows since 2023 exit, funds shift to US, South Korea, Taiwan, Japan, leaving India and China under pressure
Foreign Investors Pull Billions from India as AI Trade Draws Funds to US, Taiwan
The churning by foreign investors amid the shifting global dynamics driven by AI has led to a massive foreign outflow from India in 2026, as over 50 per cent of the amount being invested in India-focused equity funds since 2023 has now left. According to Elara Securities’ latest Global Liquidity Tracker as cited by Moneycontrol in its report, about 55% of the inflows received during the March 2023-October 2024 period have now been redeemed, led by Luxembourg and Japan-domiciled funds.
A large portion of the foreign inflows is now being by foreign investors in markets where AI-linked opportunities are better such as US, Taiwan, and South Korea.
The report stated that the US equities attracted an unprecedented $120 billion inflows in the latest week, led by exchange-traded funds (ETFs).
Elara Securities mentioned as quoted by MC that India remains a funding source for this global rotation.
The brokerage further stated that the dollar index has surged to a one-year high as investors increasingly position for a “higher-for-longer” interest-rate environment and concentrate bets on US technology companies viewed as direct beneficiaries of AI boom.
The markets of South Korea, Taiwan, Japan, and the US have seen massive inflows year-to-date in 2026.
South Korea’s Kospi has seen a record rally this year, with the benchmark index surging over 204 per cent driven by two major beneficiary stocks in the AI boom – Samsung and SK Hynix. Likewise, Taiwan’s Taiex and Japan’s Nikkei 225 have climbed to record levels, with a jump of 62 per cent and 40 per cent, respectively, year-to-date in 2026.
In the US, tech-heavy Nasdaq saw an upward momentum, as the index has surged 14 per cent so far.
Elara said the global emerging market funds have increasingly become a proxy for the AI value-chain trade as South Korea and Taiwan now account for around 52 per cent of the benchmark emerging market index.
Chinese and Indian markets have remained under pressure with the lack of AI stocks. Both markets saw a record outflow of $440 million and $1.7 billion in the previous two weeks.
Meanwhile, investors continued to pull money out of precious metals funds. Outflows from the category rose to a 12-week high of $3 billion, taking cumulative withdrawals since March to $18 billion, according to the report, as quoted by the MC.
About the Author
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the I…Read More
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