Poor stock market returns at home appeared to have pushed many Indian investors to diversify geography-specific risk and reduce home-market bias. The trend is being observed amid the artificial intelligence (AI) theme being playing out globally, driven by what is being termed as “the mother of all AI capex cycles” in the US. Stocks have surged across Wall Street, while markets such as Korea and Taiwan more than doubled in less than a year on AI-driven semiconductor demand, leaving many domestic investors high and dry.

Domestic fund managers offering fund of funds (international funds) to Indian investors managed Rs 38,287 crore in assets at March-end, latest monthly data available with AMFI showed. Besides, Indians directly invested $2.2 billion in global equities and debt between April 2025 and February 2025 in the first 11 months of FY26, up 60 per cent YoY, Bloomberg said in report quoting the RBI data. 

With no clear AI plays in India, MSCI India has underperformed MSCI EM over the last 12 months, with India's share in the global market capitalisation lying near a three-year low of 3 per cent. In fact, Sensex and Nifty have declined about 8 per cent each from September 2024 peaks against 30–150 per cent rise in global markets.

A tepid earnings growth has been a concern for India. Global markets are pricing in 20-40 per cent earnings growth against India’s 18 per cent EPS growth. "India’s lower exposure to AI hardware and the narrow, concentrated nature of the global AI rally have limited participation, thereby overstating overall market weakness," MOFSL said.

 Its no brainer Indian interest in global stocks has picked up.

International funds as a mutual fund category delivered 27.50 per cent returns compounded annually in the past three years against a 14 per cent return delivered by domestic equity largecap funds. In the last one year, international funds delivered 55 per cent returns against a muted 3 per cent return for Equity largecaps category. 

Schemes such as Nippon India Taiwan Equity (up 237 per cent), Mirae Asset Global Electric & Autonomous Vehicles (up 113 per cent), DSP World Gold Mining Overseas Equity (up 112 per cent) in fact more than doubled investor money in the past one year. Direct investing in US stocks too has seen uptick. 

In the case of India, foreign investors are pulling money out of Indian markets amid a sharp depreciation in rupee. They have sold Rs 2,06,180 crore in domestic equities in 2026 so far, in addition to Rs 1,66,286 crore outflows in 2025, leaving Indian markets rely soley on domestic flows via mutual funds.  

Sensex and Nifty slipped up to 4 per cent in the past one year compared with 20-30 per cent surge for US benchmarks S&P500 and Dow Jones Industrial Averages, and 100-190 per cent returns by markets across Korea and Taiwan, riding on AI theme.