(Bloomberg) — Investors in India, long focused almost entirely on domestic markets, are increasingly starting to look outward.
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A growing number are moving money abroad, seeking diversification after a stretch of weaker relative returns and sustained foreign outflows from local equities that have driven the rupee to record lows.
Indians invested more than $2.2 billion in overseas equities and debt in the 11 months through February, a 60% jump from the year-ago period, according to Reserve Bank of India data. Meanwhile, assets in global feeder funds run by local money managers hit a record $4 billion in March, data from the Association of Mutual Funds in India show.
What’s changing is how local investors are thinking about their portfolios. India is only about 3% of the global equity market, and its stocks don’t always move in line with the rest of the world, making overseas investing a simple way to spread risk. A weaker rupee is making foreign assets attractive, as overseas returns get a currency boost, while easier access is attracting more people.
The shift is also being driven by the performance of local shares. The MSCI India Index has trailed its emerging markets counterpart by about nearly 50% over the past year, even after recovering from its March lows. This is mainly due to slower earnings growth and limited exposure to themes like semiconductors. Meanwhile, markets such as Taiwan and South Korea have reached new highs.
“I wanted to be where the real innovation is happening,” said Abhishek Dadhich, a 38-year-old tech employee in the Indian city of Pune, who has been investing in US stocks since 2023. Dadhich said his grasp of technology helped him more than triple his investments to over $300,000, exceeding his expectations.
Investors like him are driving growth in platforms that let Indians trade foreign stocks. Assets with Vested Finance Inc. topped $1 billion in April, about doubling from a year ago, founder Viram Shah said in an interview. The firm aims to reach $5 billion over the next three years, he said.
India allows individuals to remit up to $250,000 abroad, but the policy has been underutilized for investment purposes mainly due to the lack of convenient platforms for transactions.
