Global funds are executing the largest sell-off of Indian equities on record, driven by fears that the US-Iran conflict will trigger an energy crisis that could derail growth in Asia's third-largest economy. The unprecedented capital flight reflects mounting concerns that geopolitical tensions are threatening India's economic expansion at a critical juncture.

India has been the world's fastest-growing major economy, attracting substantial foreign investment in recent years. The current exodus marks a dramatic reversal as investors reassess risk amid escalating Middle East tensions. Energy security has become a paramount concern for a nation heavily dependent on oil imports, with potential supply disruptions threatening to fuel inflation and slow industrial activity.

The scale of the sell-off underscores how quickly market sentiment can shift when geopolitical risks materialize. Foreign portfolio investors are withdrawing billions from Indian markets, pressuring the rupee and raising borrowing costs. This capital flight could complicate India's growth trajectory just as the country was positioning itself as a key driver of global economic expansion in the post-pandemic recovery.