A pedestrian walks in front of the Bombay Stock Exchange (BSE) digital broadcast in Mumbai.
Indranil Mukherjee | AFP | Getty Images
Domestic investors played a key role in helping India’s stock market avoid a “free fall” after foreign investors sold billions worth of shares last year, the CEO of India’s oldest stock market told CNBC’s “Squawk Box Asia” on Tuesday.
“India is growing, but a significant portion of the population has not yet entered the capital markets,” Sundaraman Ramamurthy, managing director of the Bombay Stock Exchange (BSE), told CNBC. He added that 35 million Indian investors registered via BSE last year.
He said the holdings of foreign participants in Indian stock markets used to exceed those of domestic institutions, but “now that has reversed”.
The CEO added that Indian institutional investors invested a net $91 billion in the stock market last year, while foreign investors withdrew $35 billion.
“This has not only addressed the outflow (of foreign capital) but also strengthened the Sensex significantly and prevented freefall,” Ramamurthy said on the sidelines of the Motilal Oswal India Corporate Day 2026 in Singapore.
Foreign investors remain bearish on India, citing weak earnings and the negative economic impact of rising global oil prices due to the Middle East conflict.
Despite India being a global information technology leader, there is no presence of major companies in the AI ecosystem, which further worsens foreign investor sentiment.
India lacks a clear “AI-driven story” and the Indian market is down about 10% in US dollar terms, HSBC Research said in a report on Tuesday.
“Asian stocks are primarily driven by positive sentiment around AI,” the report said, adding that in contrast to India, AI-focused markets such as South Korea and Taiwan are up about 80% and 40%, respectively, since the beginning of the year.
However, this has not affected the inflow of funds into domestic stocks. According to local media reports, total inflows into equity mutual funds reached 384.4 billion rupees (about $4 billion) in April, an increase of 58% from a year earlier.
India’s benchmark index BSE Sensex has fallen 11% since the beginning of the year, making it one of the worst performers in Asia, according to LSEG data.
