Is India diverging from EM rally? Why FIIs are picking China & Brazil over Nifty, Sensex
The selling has accelerated significantly. In the first half of November 2025 alone, FIIs have sold over Rs 13,900 crore in Indian equities in the secondary market.
- Nov 21, 2025,
- Updated Nov 21, 2025 4:17 PM IST
While global liquidity is pushing Emerging Markets (EM) to the brink of a historic breakout, the Indian stock market appears to be the odd one out. A recent note by brokerage firm Elara Capital highlights a sharp divergence: while global money is chasing equities in China, Taiwan, South Korea and Brazil, foreign sentiment toward India remains muted despite benchmark indices Nifty and Sensex revisiting earlier highs.
According to Elara Capital's Global Liquidity Tracker report, India-dedicated funds are witnessing a prolonged exit. These funds recorded their 11th consecutive week of redemptions, with outflows of $208mn, the brokerage said. While there was a nominal net inflow of $148 million into India, this was solely driven by allocations from broader Global Emerging Market (GEM) funds, masking the underlying bearishness of India-focused investors.
The selling has accelerated significantly. In the first half of November 2025 alone, FIIs have sold over Rs 13,900 crore in Indian equities in the secondary market. This aligns with Elara’s observation that the "pressure continues to come primarily from Luxembourg-domiciled funds" and Japan-based investors.
In stark contrast, the broader EM pack is seeing a liquidity surge. GEM funds clocked $3.1 billion in inflows—the strongest in two months. Elara Capital pointed out that flows were "particularly robust into China, Taiwan (6-month high), South Korea, and Brazil," with Brazil seeing its largest inflows since May 2017. Elara observed that EM equity indices are currently retesting historic peaks last seen in February 2021 and October 2007, calling this a critical inflection zone as investors position for a potential breakout.
Japan remains a key seller of Indian equity. Elara Capital highlighted that Japan-domiciled funds have now seen 18 consecutive weeks of redemptions totalling $1.1bn from India.
Meanwhile, back in Tokyo, significant policy shifts are underway to address domestic economic concerns. Japan’s Prime Minister Sanae Takaichi on Friday cleared a sweeping stimulus package designed to cushion households and businesses from persistent inflation, according to media reports. The plan — introduced by the country’s fifth leader in five years — is valued at 21.3 trillion yen (about $135 billion) and is expected to include tax relief and continued support for energy costs.
Investors should also keep an eye on global risk indicators. Elara Capital warned that High-Yield (junk) bond funds are flashing "early caution". After a brief post-Trump tariff inflow, these funds have seen six weeks of outflows totalling $9 billion. The brokerage noted that Net Asset Values (NAVs) in this segment have returned to October 2021 highs—"the level from which the last major global equity sell-off began"
While global liquidity is pushing Emerging Markets (EM) to the brink of a historic breakout, the Indian stock market appears to be the odd one out. A recent note by brokerage firm Elara Capital highlights a sharp divergence: while global money is chasing equities in China, Taiwan, South Korea and Brazil, foreign sentiment toward India remains muted despite benchmark indices Nifty and Sensex revisiting earlier highs.
According to Elara Capital's Global Liquidity Tracker report, India-dedicated funds are witnessing a prolonged exit. These funds recorded their 11th consecutive week of redemptions, with outflows of $208mn, the brokerage said. While there was a nominal net inflow of $148 million into India, this was solely driven by allocations from broader Global Emerging Market (GEM) funds, masking the underlying bearishness of India-focused investors.
The selling has accelerated significantly. In the first half of November 2025 alone, FIIs have sold over Rs 13,900 crore in Indian equities in the secondary market. This aligns with Elara’s observation that the "pressure continues to come primarily from Luxembourg-domiciled funds" and Japan-based investors.
In stark contrast, the broader EM pack is seeing a liquidity surge. GEM funds clocked $3.1 billion in inflows—the strongest in two months. Elara Capital pointed out that flows were "particularly robust into China, Taiwan (6-month high), South Korea, and Brazil," with Brazil seeing its largest inflows since May 2017. Elara observed that EM equity indices are currently retesting historic peaks last seen in February 2021 and October 2007, calling this a critical inflection zone as investors position for a potential breakout.
Japan remains a key seller of Indian equity. Elara Capital highlighted that Japan-domiciled funds have now seen 18 consecutive weeks of redemptions totalling $1.1bn from India.
Meanwhile, back in Tokyo, significant policy shifts are underway to address domestic economic concerns. Japan’s Prime Minister Sanae Takaichi on Friday cleared a sweeping stimulus package designed to cushion households and businesses from persistent inflation, according to media reports. The plan — introduced by the country’s fifth leader in five years — is valued at 21.3 trillion yen (about $135 billion) and is expected to include tax relief and continued support for energy costs.
Investors should also keep an eye on global risk indicators. Elara Capital warned that High-Yield (junk) bond funds are flashing "early caution". After a brief post-Trump tariff inflow, these funds have seen six weeks of outflows totalling $9 billion. The brokerage noted that Net Asset Values (NAVs) in this segment have returned to October 2021 highs—"the level from which the last major global equity sell-off began"