InvestmentFlows – India Draws Stronger Foreign Interest as Global Industrial Fund Momentum Slows
InvestmentFlows – Foreign investor interest in India showed fresh signs of improvement during the latest reporting period, indicating that selling pressure may be easing after several months of sustained withdrawals.
India’s investment landscape is beginning to display encouraging signs of stability as foreign fund activity improves, according to the latest Global Liquidity Tracker released by Elara Capital. Although overall net inflows remained relatively small at $17 million, the report noted that redemption pressure has paused following cumulative outflows of $8.6 billion since February. The latest figures suggest investor sentiment toward Indian assets is gradually becoming less cautious.
India Records Strongest Weekly Foreign Inflow Since March
The report highlighted that exchange-traded funds (ETFs) focused on India played a key role in supporting the recent recovery, attracting $118 million during the week. In contrast, actively managed long-only funds continued to experience withdrawals totaling $101 million. Despite this divergence, India received a total country-level inflow of $184 million, representing its strongest weekly foreign investment since March. Analysts believe this reflects a noticeable improvement in overseas investor positioning toward the Indian market.
Global Industrial Funds Lose Momentum
A significant development in global markets was the slowdown in industrial sector fund flows. According to the report, global industrial funds recorded negative rolling four-week flows for the first time since the artificial intelligence-driven investment cycle began in May 2025. This change signals a potential shift in investor preferences after a prolonged period of strong allocations to industrial companies linked to AI-related growth.
Meanwhile, technology-focused funds continued to receive the largest share of investor capital. The sustained inflows indicate that investors remain more confident in companies viewed as direct beneficiaries of artificial intelligence rather than businesses operating across the broader AI supply chain.
Precious Metals Attract Renewed Investor Interest
Investor demand for precious metals also strengthened during the latest reporting period. Gold funds registered their highest weekly inflow since the middle of April, reflecting renewed interest in safe-haven assets amid changing market conditions. At the same time, silver fund flows continued to stabilize after experiencing several months of heavy redemptions, suggesting that selling pressure in the precious metals segment may be easing.
Consumption Sector Continues to Face Pressure
The report identified consumption-focused funds as one of the weakest-performing investment categories during the current AI-driven market cycle. These funds have recorded consistent outflows since November 2025. However, while investors are still withdrawing money from the sector, the pace of redemptions has slowed in recent weeks, indicating that selling activity may be beginning to moderate.
Emerging Markets Benefit From Selective Buying
Emerging market funds also experienced stronger investor participation after recent market weakness. With the Emerging Market Index falling around 10 percent from its peak, investors have started selectively increasing exposure. Global Emerging Market (GEM) funds attracted another $1.9 billion during the latest week, following inflows of $1.8 billion in the previous week. Together, the two-week total reached $3.7 billion, reversing approximately 28 percent of the $13 billion withdrawn over the preceding ten weeks.
US Equities See Moderate Outflows While Asian Markets Differ
In the United States, equity funds recorded another modest weekly outflow of $6 billion. This marked the third week of redemptions over the past five weeks, suggesting that the exceptionally strong investment momentum previously seen in US equities has begun to moderate following the SpaceX listing.
Elsewhere in Asia, foreign investment into Taiwan and South Korea continued to cool. However, domestic investors remained active buyers during the market correction. Taiwan’s domestic funds recorded inflows of $4.8 billion, representing the second-largest weekly total on record. Notably, the previous record was also achieved immediately after the June market correction, highlighting continued confidence among local investors despite weaker foreign participation.