Indian markets face outflows while AI debt offers credit opportunities

HSBC Mutual Fund reports that Indian markets face headwinds from rising global bond yields and foreign investor outflows. In September, foreign institutional investors withdrew USD 4.1 billion from Indian equities, contributing to a total selling volume of USD 28.3 billion for 2026. Despite these challenges and a broad-based correction in sectors like information technology and automobiles, HSBC expects a recovery in corporate earnings to drive equity returns in the near term.

Separately, Goldman Sachs identifies emerging opportunities within credit markets through 2026. The firm highlights high-quality artificial intelligence (AI) debt and municipal bonds as key areas for potential investment due to higher yields. Analysts note that while credit markets have remained resilient despite rising interest rates, conditions are becoming increasingly differentiated across sectors due to technological disruption and AI-related borrowing.