India’s Finance Minister Nirmala Sitharaman highlighted the significant liquidity in the country’s equity markets, which has facilitated easier exits for foreign portfolio investors. Speaking at the IMF-World Bank meetings in Bangkok on October 15, 2026, she noted that despite a nearly 12% decline in India’s key benchmark indices since January, the underlying fundamentals of the Indian economy remain strong. The liquidity environment has allowed multinational companies, private equity funds, and foreign investors to partially or fully divest at premiums, with a substantial portion of IPO proceeds between 2021 and 2025 going to existing shareholders selling their stakes.

While foreign investors have recorded significant outflows—over $33 billion sold this year—domestic investment continues robustly, with Indian equity mutual funds registering monthly net inflows since March 2021. Sitharaman acknowledged concerns about capital flows moving away to other sectors, particularly the artificial intelligence (AI) boom centered in the U.S. and countries like Taiwan and Korea. She emphasized that although India has seen less AI-driven investment inflows compared to these regions, it is advancing steadily in frontier technologies, including efforts to develop semiconductor manufacturing capacities.

Looking ahead to 2027, Sitharaman identified several risks that could challenge India’s economic growth, such as rising costs for fuel and fertilizer, and volatility in capital flows. Despite recent market turbulence and sectoral shifts toward AI, she expressed confidence that India would not be severely impacted if the global AI investment bubble bursts, owing partly to India’s relatively limited exposure to AI investment inflows. Sitharaman refuted the perception of India as a laggard in AI development, underscoring recent investments that position the country more competitively within the global tech landscape.

Overall, the interplay of resilient economic fundamentals, active domestic investment, and a liquid market has supported India amid external pressures and market sell-offs. The government remains attentive to vulnerabilities, particularly those linked to resource costs and capital attraction, while balancing growth and technological advancement. Though foreign investor exits pose challenges, the ongoing internal capital support and strategic focus on emerging technologies aim to sustain India’s economic momentum.