India Faces Capital Outflow Amid AI-Driven Market Shift

Global investors are redirecting capital from India to Asian markets focused on AI infrastructure, risking India's position among the world's top five stock markets for the first time in three years. According to BeInCrypto, India's weight in the MSCI Emerging Markets index has fallen to about 12% from 19% a year ago, with foreign investors withdrawing a net $21 billion from Indian equities in 2026. Taiwan and South Korea are benefiting from this shift, with their markets gaining significant value. Meanwhile, India's IT sector, including Tata Consultancy Services and Infosys, is under pressure as generative AI tools automate key services.