Indian Investors Ramp Up Overseas Investments As Domestic Markets Underperform

Indian investments in overseas equity and debt rose 30 per cent year-on-year (y-o-y) in FY26 till February to $2.21 billion (Rs 20,883 crore), as weak domestic returns, a weakening rupee, the global artificial intelligence (AI) boom, and a growing preference for international diversification prompted more investors to allocate funds abroad. In comparison, such investments stood at $1.70 billion (Rs 16,064 crore) in FY25, according to data compiled from the Reserve Bank of India’s (RBI) outward remittances.

The shift is also visible in mutual fund schemes that invest in global equities and debt instruments. Assets under management (AUM) of fund of funds investing overseas rose 53 per cent to Rs 38,287 crore by March 2026, up from Rs 25,031 crore a year earlier, according to Association of Mutual Funds in India (Amfi), showing that more investors are using domestic mutual funds to invest in international markets.

Weak Domestic Returns And AI Boom Drive Global Investing Interest

Overseas investments are rising as Indian markets consolidate after a strong rally, leading investors to look at global options for better returns. Over the past year, India’s equity markets have been mostly weak. The Sensex fell 3.75 per cent, while the Nifty 50 stayed almost flat with a 0.40 per cent return. Broader markets performed better but not at par with what global markets have delivered. The Nifty Midcap 100 and the Nifty Smallcap 100 gained around 14 per cent over the past one year.

Global markets, however, have done much better. South Korea’s Kospi rose 190 per cent, Taiwan’s TAIEX gained 102 per cent, Japan’s Nikkei 225 climbed nearly 70 per cent, and the US Nasdaq rose about 44 per cent in the same period.

The reason behind their outperformance is the artificial intelligence (AI) boom, which has quite justifiably attracted domestic investors. Taiwan’s TSMC, the world’s biggest chipmaker, has been a key driver of this trend. It makes up more than 45 per cent of Taiwan’s main index, TAIEX. Other companies like MediaTek, Hon Hai, ASE Technology, Delta Electronics, and Quanta Computer have also seen strong gains due to rising demand for AI-related products.

South Korea has also benefited from this trend. Samsung Electronics and SK Hynix, which together account for over 40 per cent of the Kospi index, have gained from strong demand for advanced memory chips used in AI systems.

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