Nirmala Sitharaman, India’s finance minister, spoke during the annual meetings of the International Monetary Fund (IMF) and World Bank held in Bangkok, Thailand, on October 15, 2026. In an exclusive interview, she discussed the current state of India’s equity markets and the broader economy.
Current Challenges in India’s Equity Market
Excess liquidity appears to be affecting performance in India’s equity market, leading to underwhelming results, according to Sitharaman. “Because of the ease of liquidity, ease of availability, people are even exiting easily,” she noted in her remarks to CNBC. Despite this, she asserted that the underlying fundamentals of the Indian economy remain strong.
Data from LSEG shows that since January, India’s key benchmark indexes have declined by nearly 12%, which comes at a time when the economy is navigating trade uncertainties and geopolitical tensions. Foreign investors are reportedly withdrawing significant capital from India’s equity markets, which Sitharaman identified as a substantial risk for the nation heading into 2027.
Domestic Investment Trends
On a more positive note, domestic investment has continued to thrive. According to the Association of Mutual Funds in India, Indian equity mutual funds have experienced net inflows every month since March 2021. This is in stark contrast to the notable exit of foreign portfolio investors, which have sold over $33 billion in Indian equities this year alone, data from NSDL reveals.
IPO Market Dynamics
Between 2021 and 2025, Indian initial public offerings (IPOs) were highly lucrative, raising a total of $60.4 billion. A considerable portion—$37.7 billion, or approximately 63%—was primarily directed to existing shareholders who chose to sell their stakes. This trend underscores the dynamics of exit strategies within the Indian market.
Global Investment Trends and AI Focus
Sitharaman highlighted that India has not secured significant investments in the artificial intelligence (AI) sector, especially when compared to markets like Taiwan and Korea, which have become hotspots for AI investments. This shift has led to India losing market share in the MSCI Asia Pacific ex-Japan index, shrinking from a 19% share to just 10%.
Despite concerns regarding the global AI investment bubble, Sitharaman reassured that India would not be adversely affected by potential downturns in that sector. She emphasized that the absence of AI-centric investments means that the country may not face the same pressures as others if market enthusiasm wanes.
Fostering Frontier Technologies
As the longest-serving finance minister in India’s history, Sitharaman expressed optimism about the country’s position in frontier technologies. She remarked that India is actively making strides in establishing semiconductor manufacturing capabilities, positioning the country as an emerging player in advanced technology sectors.
