- Indian investors increased overseas equity and debt investments by 60 percent year-on-year
- Assets in global feeder funds by Indian money managers hit a record $4 billion in March
- MSCI India Index lagged broader emerging markets by nearly 50 percent in the past year
Stock Market News: Indian investors, long focused almost entirely on domestic markets, are starting to look outward. The trigger is not panic. It is performance.
Data from the Reserve Bank of India show Indians invested over $2.2 billion in overseas equities and debt in the 11 months through February. That is a 60 per cent jump from a year ago. At the same time, assets in global feeder funds run by local money managers touched a record $4 billion in March, according to the Association of Mutual Funds in India.
What is changing is the way investors think about portfolios. India makes up only about 3 per cent of the global equity market. Yet for years, most retail portfolios were almost entirely India-only. That home bias is now being questioned. Follow Live Updates
A weaker rupee is adding to the overseas appeal. Overseas gains get a currency boost. Access is also getting easier through new platforms and products coming out of GIFT City.
Performance gap is hard to ignore. The MSCI India Index has trailed the broader emerging markets index by nearly 50 per cent over the past year, even after recovering from March lows. Slower earnings growth and limited exposure to themes like semiconductors and AI have weighed on returns. Meanwhile, markets like Taiwan and South Korea have touched new highs on the back of the global AI and chip cycle.
Nikunj Saraf, CEO of Choice Wealth, says Indian markets have delivered "steady, if measured" returns, with the Nifty 50 up around 9.5 per cent in CY2025. But he says investors are now looking beyond Dalal Street not out of dissatisfaction, but to participate in themes that India does not fully represent yet.
He points to markets with deep semiconductor and tech exposure. The Nasdaq is up about 18 per cent this year. South Korea's Kospi has surged nearly 75 per cent. Hong Kong's Hang Seng is up 32 per cent, and Taiwan's TAIEX about 28 per cent, driven largely by AI infrastructure spending.
India, he notes, is still building its AI and chip ecosystem despite the Rs 10,371.92 crore IndiaAI Mission. That creates a gap for investors seeking direct exposure to the AI opportunity.
Dale Vaz, Founder of SAHI, says this is a classic case of portfolio evolution. India may be 3 per cent of global market cap, he says, but many Indian SIP investors still have 100 per cent of their money at home. That is now changing as investors seek better returns and lower risk through global diversification.
He says investors are increasingly looking at US hyperscalers and fast-growing listed tech firms to ride the AI and deep-tech capex cycle. "The question is no longer whether to look outside - it's how to do it right," Vaz says.
Notably, Indians can send up to $250,000 abroad every year under the Liberalised Remittance Scheme. But this route was underused because of paperwork, friction and lack of easy platforms.
That is now changing. Clearer rules for global investment products from GIFT City and mobile apps offering direct overseas investing are lowering entry barriers. Asset managers such as DSP and PPFAS have launched outbound funds from GIFT City for retail investors. DSP's Global Equity Fund, launched in June, invests largely in the US but also in Taiwan, China and Europe.
Returns from some of these global-focused funds have been striking. The HSBC Brazil Fund has gained nearly 70 per cent in the past year. The Axis Greater China Fund is up 65 per cent.
Abhishek Bhilwaria, an AMFI-registered mutual fund distributor, says the shift is also linked to record foreign investor outflows and a phase of stagnation in Indian markets in early 2026. He cautions that investors must understand the rules.
Under LRS, a 20 per cent Tax Collected at Source applies on remittances exceeding Rs 10 lakh, which can later be adjusted against tax liability. Direct equity investment is allowed, but trading in foreign futures and options is not. All foreign assets must be disclosed in Schedule FA of income tax filings to avoid penalties under the Black Money Act.
For those who want a simpler route, Bhilwaria says Indian-domiciled feeder funds allow exposure to global themes in rupees without immediate LRS paperwork and upfront TCS.
Even now, overseas investing is still a small part of overall flows. Domestic mutual fund SIPs alone are bringing in about $3 billion every month, helping offset record foreign outflows from Indian equities.
But the direction of change is clear. Platforms like Interactive Brokers and Vested are popular with Indian investors. Zerodha's CEO Nithin Kamath has also said the firm plans to roll out access to global stocks. State Street is preparing model portfolios of overseas stocks for Indian retail investors.
For many investors, this is no longer about chasing returns alone. As Saraf puts it, global diversification is less about seeking an exit from India and more about building a well-rounded portfolio -- one that captures India's growth story and the world's most transformative themes at the same time.
