Global Markets Experience Rally, But Access to Overseas Funds Narrows for Indian Investors

India's Equity Market Faces Competition from Taiwan and South Korea

India's equity market is experiencing pressure from a global rally driven by artificial intelligence (AI) and semiconductor stocks, with Taiwan and South Korea rapidly closing the gap. Taiwan's market capitalization has reached approximately $4.6 trillion, just 6 percent shy of India's roughly $4.9 trillion, while South Korea has moved to around $4.2 trillion.

According to Moneycontrol, Taiwan has added more than $1 trillion in market value in just the first four months of 2026, primarily driven by semiconductor and AI-linked stocks. Over the past year, both Taiwan and South Korea have collectively added trillions in market value, rapidly narrowing the gap with India.

However, as global opportunities expand, Indian investors have fewer avenues to tap into them. Several fund houses have begun restricting fresh inflows into overseas schemes, even as returns from global markets continue to outpace India. This results in a narrowing window for investors seeking to diversify internationally.

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Restrictions on Fresh Inflows into Overseas Schemes

Several fund houses have started restricting fresh inflows into overseas schemes, including Nippon India Mutual Fund and Axis Mutual Fund. Nippon India Mutual Fund stopped fresh inflows into its Taiwan-focused fund after a surge in both returns and assets. The fund delivered around 252 percent returns in the year ending April 23, 2026, while its assets under management more than doubled from Rs 275 crore to Rs 599 crore.

Axis Mutual Fund has temporarily suspended fresh investments in some of its overseas schemes, including global and China-focused funds. The pause applies across both lump-sum investments and systematic routes like SIPs and STPs.

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Global Funds Still Accepting Investments

A handful of global funds are still accepting investments, and their recent performance shows why demand hasn't cooled. Across categories, returns have been strong. Funds with exposure to global themes and markets have delivered double-digit gains, with year-to-date returns ranging from about 10 percent to as high as 26 percent.

The one-year numbers are even more striking, with several funds generating 30 percent to over 60 percent returns, led by those tracking US technology indices. Nasdaq-linked strategies, in particular, have been the standout performers, benefiting from the continued rally in global tech and AI-driven stocks.

In contrast, domestic markets have lagged. The Nifty50 is down nearly 7 percent this year and has remained largely flat over the past year. While global funds, especially those linked to technology, have delivered strong, consistent returns, Indian equities are going through a weak phase.

Global Funds Pull Ahead of India

The numbers show a clear pattern. Funds linked to US technology indices, especially Nasdaq-based ETFs, are leading the pack, with strong returns across both one-year and three-year periods. Even broader global and thematic funds have delivered solid double-digit gains. The Nifty50, in contrast, has barely moved over the past year.

Global markets are doing well, particularly sectors tied to technology and innovation, but the number of funds available to invest in is shrinking. For investors looking to diversify beyond India, it means fewer choices, and a greater need to act when opportunities are still open.