Business EconomyPosted at: Oct 19 2026 5:45PM


Sitharaman flags capital outflows, easy investor exits as reasons behind Market decline

New Delhi, Oct 19 (UNI) union Finance Minister Nirmala Sitharaman has flagged persistent foreign capital outflows and the ease with which investors can withdraw funds as key challenges for Indian equities. However, she maintained that India's underlying economic fundamentals remained sound despite the recent weakness in share prices.
Sitharaman, in a media interview said, “Because of the ease of liquidity, ease of availability, people are even exiting easily.”
She identified sustained capital outflows as one of the biggest risks facing the country in 2027. The markets have delivered zero returns in the last two years.
Benchmark stock indexes have fallen nearly 12% since January due to trade-related uncertainty and geopolitical disruptions.
According to NSDL data, foreign portfolio investors have sold Indian equities worth more than $33 billion so far this year.
India increasingly viewed as market left out of AI investment boom:
Indian markets have been increasingly been viewed as a market left out of the artificial intelligence investment boom. Countries like Taiwan and South Korea, home to major AI-related companies, have attracted substantial foreign investment.
“The flight of capital toward AI and the US, which otherwise moves toward different countries for different sectoral investments, is a concern,” she said.
She indicated that India could be relatively resilient to a broader market correction triggered by a potential reversal in the AI boom, given its comparatively limited exposure to the rally in AI-related assets.
"India had yet to attract AI investments on the scale seen in other regions, potentially limiting the impact of any unwinding of AI-driven market gains. India was no longer lagging in advanced technology and was actively building its semiconductor manufacturing capabilities," she added.
During her address, the Finance Minister called for a combination of public investment, stronger municipal finances, development finance and private capital to create financially sustainable cities capable of attracting investments.
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