Global funds are rapidly exiting Indian equities, with withdrawals totaling $18.84 billion in just over three months, surpassing the previous yearly outflow record of $18.79 billion set in 2025. The ongoing energy crisis stemming from the US-Iran conflict is exacerbating concerns about India's economic stability, leading to a significant decline in market confidence. Since its peak last year, the Indian equity market has seen over $600 billion wiped off its value. As foreign investors shift their focus to economies linked to artificial intelligence, such as South Korea and Taiwan, which have reported inflows of $3.6 billion and $5.6 billion respectively, India's appeal is diminishing. Despite domestic investors contributing $31 billion this year, the persistent foreign selling has led to a cumulative outflow of over $34 billion from Indian equities in the past two years. The Nifty 50 Index has dropped by 8% this year, with the rupee hitting record lows, prompting intervention from the central bank to stabilize the currency. Analysts suggest that foreign investment may return once geopolitical tensions ease and valuations become more attractive.