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Informist, Monday, Jul. 6, 2026

MUMBAI – Liquidity in equity, commodity, and energy markets is going down after historic inflows recently, Elara Securities (India) Pvt. Ltd. said in a research report. The "exceptional" momentum of inflows in US allocations may be beginning to moderate, the brokerage said. Additionally, high redemptions in emerging markets, primarily through exchange-traded funds, could be a sign that allocation in such markets, which was initially driven by artificial intelligence trade, may have started losing traction, according to Elara.

Equities in the US had two straight weeks of outflows with redemptions of $17 billion and $8 billion in each week. Such outflows, last seen in February, come after a large inflow of $120 bln three weeks ago. A cumulative $9 billion was redeemed by ETFs, which is the first such instance of net ETF redemption since the war in West Asia broke out. At the same time, redemptions from global emerging markets extended into the ninth week, accelerating to $2 billion from $500 million, which is the longest streak of outflows since 2023. The trend of outflows suggests that the broad emerging market allocation trade since May 2025, which was heavily influenced by AI-related positioning, is losing traction.

Markets in India and China had already been under pressure, but incremental weakness is emerging from the earlier leaders of AI and commodity trade, the brokerage said. Taiwan had its largest weekly foreign outflow in 11 years at $766 million, while Brazil remains the weakest with nearly $2 billion withdrawn over seven weeks, erasing all inflows since April. Outflows in South Korea were slower at $283 million this week, Elara said. India flows weakened after a brief pause. Total outflows were at $580 million this week and $94 million in the previous week. However, peak pressure was seen during March and April when weekly outflows averaged nearly $1 billion. This week, India-focussed funds accounted for $250 million of the total outflows and the remaining outflows were from global equity market funds and Asia, excluding Japan funds.

Among sectors, outflows from global commodity equity funds continued since March and expanded to an eight-week high of $1.5 billion this week. Energy-focussed funds saw a sixth straight week of outflow with a record redemption of $3.2 billion this week. Industrial funds saw some relief with a small inflow of $222 million after a 12-year high outflow of $1.5 billion the previous week. Gold outflows increased to a 14-week high of $3.1 billion. Silver flows were stable this week.  End

Reported by Eshitva Prakash

Edited by Avishek Dutta

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