Is it true that many of the international ETFs have been selling into Indian equities?

That is absolutely correct. India has been seeing very sharp outflows of late by India dedicated funds in the calendar year 2020. These ETFs are normally passive investors who just buy and sell in index stocks that are part of benchmark indices.

Most of the global ETFs and index funds tend to index their flows on the MSCI Emerging Markets Index for the sake of India allocation. According to recent data compiled on the volume and quantum of ETF flows into India the selling has been quite strong.

India dedicated funds saw over $8 billion being pulled out of Indian equities during this period followed by the Global Emerging Funds or GEM funds at $2.8 billion. If you add u these up, then the total amount pulled out from India by ETFs is close to $11 billion.

These ETFs typically represent passive flows into Indian equity indices and are preferred by large hedge funds, macro funds, allocation funds, index funds and the country dedicated flows. These are rather agnostic in nature and focus on indices rather than stocks.

They commandeer a lot more money globally than active funds and are normally active in stocks that are linked to an index. Hence ETF flows tend to have an oversized impact on the market levels where sustained sell-off leads to sharp corrections in the indices.