Is India’s Market Rally Losing Steam? FLIN ETF Faces Critical Test

Domestic Optimism Counters Foreign Exodus

The Franklin FTSE India ETF (FLIN) is navigating turbulent waters as foreign capital exits the market amidst a significant equity downturn. This challenging environment emerges even as domestic investors demonstrate unprecedented confidence, opening record numbers of new trading accounts. The combined effect has pushed major Indian benchmarks toward their first negative annual performance since 2020.

A dramatic shift in investment patterns is unfolding across Indian markets. Foreign portfolio investors liquidated holdings worth ₹30,141.68 crore during September 2025 alone, following even larger outflows of ₹46,902.92 crore the previous month. This substantial capital flight has exerted considerable pressure on key indices, with the Sensex declining 5.5% and the Nifty 50 dropping 5.05% year-to-date.