FPIs exit Korea & Taiwan: Is India ready for the flow rotation?

Subscribe to enjoy similar stories.Foreign investors have spent much of this year cutting exposure to Indian equities, diverting some capital to Taiwan and South Korea amid an AI-driven rally and robust semiconductor earnings. However, recent selling in those East Asian markets has brought the conversation surrounding foreign flows back to India.According to Bloomberg data, Foreign portfolio investors have pulled nearly $23.4 billion from Indian equitiesso far this year, driven by stretched valuations, rupee weakness and softer earnings growth expectations.

This sustained selling, coupled with a rising current account deficit, has severely weakened the rupeeBut the flow picture across Asia is signaling some shifts. South Korea and Taiwan, which had become favourite markets for global investors riding the artificial intelligence and semiconductor boom, have started seeing large outflows.

So far this week, overseas investors have pulled out over $7.8 billion from South Korean equities and over $4.3 billion from Taiwan, according to Bloomberg. This marks the fourth consecutive week of outflows from South Korea and the second straight week of selling in Taiwan.For India, the timing is important.

While FPIs have remained heavy sellers for most of the year, Indian equities have seen inflows of around ₹194million in the week so far. Though modest compared to earlier outflows, the reversal sparks hope.

Is this the start of a decisive foreign capital rotation back to India, or will a weak rupee and macro headwinds keep a lid on FPI inflows?While it's too early to predict, V.K. Vijayakumar, chief investment strategist at Geojit Investments, highlights that the outflows from South Korea and Taiwan reflect concerns over rich