In Bangkok on October 19, 2026, Finance Minister Nirmala Sitharaman spoke to CNBC while attending the IMF‑World Bank meetings. The setting placed her remarks amid a gathering of international financial officials, giving her comments on Indian markets a immediate global audience.
During that interview, Sitharaman argued that the Indian equity market’s underperformance stems from excess liquidity and the ease with which investors can pull money out. She said, "Because of the ease of liquidity, ease of availability, people are even exiting easily," highlighting how simple it is for funds to move in and out of Indian stocks.
Excess liquidity in India’s equity market has contributed to underperformance and may continue to do so, according to Finance Minister Nirmala Sitharaman. “Because of the ease of liquidity, ease of availability, people are even exiting easily” from equities, Sitharaman told CNBC in an exclusive interview on the sidelines of the IMF-World Bank meetings in Bangkok on Friday. However, the fundamentals of the Indian economy are “fine,” she said.
Despite pointing to liquidity as a problem, Sitharaman maintained that the core economic fundamentals of India are fine.
This longer‑term window shows that the selling pressure has been building for more than a year and a half.
She noted that foreign investors have been pulling back due to a combination of higher US Treasury yields, a stronger dollar and elevated oil prices. These external factors, she explained, make Indian equities less attractive relative to other assets, prompting a shift of capital abroad.
According to the data she referenced, foreign investors withdrew $32.8 billion from Indian equities over the course of 2026. This figure captures the scale of the outflow during that year alone, underscoring the intensity of the exit trend.
Looking further back, the minister said that since October 2024, foreign investors have sold almost $63.6 billion of Indian stocks. This longer‑term window shows that the selling pressure has been building for more than a year and a half.
Finance minister Nirmala Sitharaman said that too much liquidity and easy entry exit is causing Indian stock market to underperform. As far as I know her, she will use this senseless argument to introduce a locking period in equity investment and increase STCG to 40% to prevent people from withdrawing their money for market.
The $63.6 billion sold since October 2024 effectively wipes out the $63.5 billion that foreign investors had accumulated in Indian equities over the previous nine years. In other words, recent outflows have reversed nearly a decade of net inflows.
Within that broader trend, March 2026 recorded the largest single‑month outflow, with foreign investors pulling $12.7 billion out of the market. That month marked the peak of the exit pressure to date.
Reflecting the selling pressure, India’s benchmark equity indexes have fallen nearly 12 % since January. The price decline aligns with the net capital leaving the market and the heightened volatility described by the minister.
Sitharaman’s assessment leaves the Indian equity market at a crossroads: liquidity remains abundant, making exits easy, while external headwinds continue to pull funds away.