Foreign capital withdrawal wipes out ten years of accumulation! India "steps into the void" in the AI wave, stock market value drops out of the top five globally.

After continuous large-scale selling of Indian stocks by foreign investors, the cumulative net investment scale of overseas investors in the Indian stock market has dropped to a near ten-year low, reflecting a continuous decline in the attractiveness of the $4.9 trillion Indian stock market. Data from the National Securities Depository Limited of India showed that as of June 1, the cumulative net investment of Foreign Portfolio Investors (FPI) in Indian domestic stocks was 7.3 trillion Indian Rupees, hitting a new low since 2016. This statistical measure summarizes the net inflow and outflow of foreign investment in Indian equity markets since 1993. The Indian stock market was once a star asset in emerging markets, but its attractiveness has been steadily declining. The oil price shock triggered by the US-Iran conflict has weakened the prospects of this rapidly developing economy. At the same time, global capital continues to flow towards economies focusing on deep AI infrastructure development. The Indian stock market has dropped out of the global top five for the first time in three years, lagging behind tech hubs in Asia such as South Korea and Taiwan. Carson Block, the founder of Muddy Waters Capital, stated last week that artificial intelligence may replace 15% of high-paying knowledge-based jobs in the US in the coming years, a trend that will profoundly impact the Indian economy. In a recent research report, Kotak Securities strategist Sanghvi Prasad and others pointed out, "Compared to other emerging markets, India's asset value proposition is weak, and we predict that foreign portfolio investment (FPI) inflows will remain subdued." Analysts added that the short-term profit growth of Indian companies is expected to lag behind that of resource and technology-driven counterparts in emerging markets, and the country is unlikely to benefit from the future AI and semiconductor industry boom in the next 1-3 years. Venkatesh Balasubramaniam, a strategist at JM Securities, noted in a report that the global funds' shareholding in listed companies has decreased from nearly 20% a decade ago to 15%. He stated that the boost from the stable inflow of funds from retail investors has led domestic mutual funds to currently control nearly 20% of the market share.