Indian Finance Minister Nirmala Sitharaman identified capital outflows as a primary economic risk for 2027. This statement follows a decline in benchmark stock indexes, with the NSE Nifty 50 falling 12.13% and the BSE SENSEX dropping 12.78% since the beginning of 2026.
Foreign portfolio investors have divested over $33 billion in Indian equities throughout the current year. In September alone, foreign institutional investors withdrew $4.1 billion, while local institutions purchased $8.1 billion in shares. Equity mutual funds have recorded consistent net inflows since March 2021.
Data from EY indicates that Indian IPOs raised $60.4 billion between 2021 and 2025, with selling shareholders accounting for $37.7 billion of that total. Additionally, India recorded nearly $10 billion in equity deals during August. Goldman Sachs reports that India's weight in the MSCI Asia Pacific ex-Japan index has decreased to 10%.
The Reserve Bank of India has intervened to support the rupee, utilizing between $75 billion and $80 billion in spot dollar sales and swaps since June 8. Total reserves declined to $734.6 billion by October 2, marking a decrease of approximately $51 billion from the peak observed in early September.
