Nirmala Sitharaman attributes equity market swings to liquidity while backing India economic strength

Finance Minister Nirmala Sitharaman has pointed to high market liquidity and smooth exit options for foreign investors as central drivers behind recent adjustments in India's equity markets, while reinforcing that the country's economic fundamentals remain on a firm footing.

Speaking on the sidelines of the International Monetary Fund and World Bank annual meetings in Bangkok, Sitharaman noted that easy availability of capital has allowed international funds and private equity firms to take quick profits. While India's benchmark equity indexes have dropped nearly 12% since January amid geopolitical friction, domestic retail and institutional investors continue to anchor market stability.

Data from the Association of Mutual Funds in India shows that domestic equity mutual funds have recorded net positive inflows every single month since March 2021. This sustained domestic participation has cushioned the impact of foreign portfolio investors selling over $33 billion in direct equities this year, as tracked by National Securities Depository Limited.

Equity liquidity and IPO capital flows

The ability of global funds to realize substantial returns reflects the depth and liquidity of India's capital markets. Between 2021 and 2025, initial public offerings in India raised $60.4 billion, according to analysis by EY. Of that total, $37.7 billion—or 63%—went to existing shareholders taking advantage of secondary share sales at premium valuations.

Global portfolio flows have also shifted temporarily toward East Asian markets heavily weighted in artificial intelligence hardware. However, Sitharaman emphasized that India remains insulated from any potential valuation bubble in global tech, as national policy focuses on building durable physical and technological infrastructure.

Technological expansion and global appeal

India is expanding its footprint in frontier technology, advancing from software services to hardware manufacturing and semiconductor fabrication. Sitharaman confirmed that major investments are underway to establish domestic semiconductor facilities, ensuring the nation is no longer a laggard in high-tech manufacturing.

Addressing global business leaders at a roundtable in Chicago organised by the Consulate General of India and the US-India Strategic Partnership Forum, the minister presented India as an operating platform for global supply chains. She highlighted national initiatives such as Production Linked Incentive schemes, Atmanirbhar Bharat, and Digital Public Infrastructure—including UPI, Aadhaar, DigiLocker, and ONDC—as transformative engines operating at national scale.

With GIFT IFSC emerging as a global financial gateway and domestic manufacturing moving into advanced component engineering, India continues to offer unmatched market depth, stability, and long-term capital appreciation for global investors.