Investors are pulling capital from the largest India-focused exchange-traded fund in the U.S. at an accelerated pace, withdrawing over $220 million on Monday as fears of a wider conflict in Iran threaten to trigger a global energy crisis.
The capital flight comes as UBS Global Wealth Management advised clients to reduce risk, downgrading Indian equities to “Neutral.” The bank “cited the market’s high sensitivity to rising oil prices, stretched valuations, and potential for currency weakness,” according to a recent note.
Monday’s withdrawal from the iShares MSCI India ETF was the largest single-day outflow for the fund since April 2025. The move extends a rout that has now seen more than $2 billion pulled from the ETF over five consecutive weeks.
The large-scale capital flight signals declining investor confidence in the Indian market’s resilience. A sustained energy price shock could pressure India’s economy, leading to further downward pressure on stock prices, increased market volatility, and a potential devaluation of the Indian Rupee as foreign capital exits.
This article is for informational purposes only and does not constitute investment advice.
