Indian stock exchange CEO says domestic investors saved markets from ‘freefall’
- Domestic investors in India kept the market from "freefall," amid foreign investor pullback, the Indian exchange CEO told CNBC.
- Indian benchmark index, BSE Sensex, is down 11% on a year-to-date basis and is among the worst-performing in Asia.
- Indian investors invested a net of $91 billion in the equity markets last year, as foreign investors pulled out $35 billion.
Domestic investors played a crucial role in helping the Indian equity market avoid a "freefall" after foreign investors sold billions worth of equities last year, the chief executive of the country's oldest stock market told CNBC's "Squawk Box Asia" on Tuesday.
"India is growing, and a significant amount of population is yet to come into the capital markets," Sundararaman Ramamurthy, the managing director of the Bombay Stock Exchange (BSE), told CNBC. He added that 35 million Indian investors have registered via BSE in the last year.
The holding of foreign participants in the Indian stock market used to be higher than that of the domestic institutions, but "today it is reversed," he said.
Indian institutional investors invested a net of $91 billion in the equity markets last year, even as foreign investors pulled out $35 billion, the CEO added.
"This has not only taken care of the [foreign capital] outflow, but also strengthened the Sensex to a great extent, and has prevented it from a freefall," Ramamurthy said on the sidelines of Motilal Oswal India Corporate Day 2026 in Singapore.
Foreign investors continue to be bearish on India due to weak earnings and the worsening economic impact from the rising global oil prices amid the conflict in the Middle East.
Despite being a global information technology leader, India does not have any big AI ecosystem companies, and this is dampening foreign investor sentiment further.
India does not have a clear "AI-led story," and its market is down about 10%, in USD terms, HSBC Research said in a report on Tuesday.
"Asian equities have been largely driven by upbeat sentiment around AI," the report said, adding that in contrast to India, AI-focused markets such as Korea and Taiwan are up around 80% and 40%, respectively, since the start of the year.
This, however, has not affected domestic capital flow into equities. According to local media reports, total inflows in equity mutual funds rose to 384.4 billion rupees (nearly $4 billion) in April, up 58% from a year ago.
The Indian benchmark index, BSE Sensex, is down 11% on a year-to-date basis and is among the worst-performing in Asia, according to data from LSEG.