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* Finally, we are seeing some slowdown in Dollar Unwind trade as soon as Trump resumed office. One big leg of carry unwind has already occurred in anticipation after Trump won elections in Oct’24.

* Redemption from EM funds showed 1^st sign of slowdown after strong round of outflows for 15-weeks. However, India flows remain under pressure (led by dedicated funds) while slower outflows also continued from China. Barring India and China, Foreign outflows stopped across all major EMs this week.

* India saw foreign redemption of $531mn this week out of which $508mn was from dedicated funds. India has seen a big round of dedicated inflow since 2023, which is finally witnessing pressure. This week’s dedicated outflows were equally strong from ETFs ($225mn) and Long-only funds ($284mn).

* Pressure on India flows from US domiciled funds continued with another outflow of $210m. Outflows from Luxemburg funds expanded to 3-month high of $128mn. Slower redemptions from Japan funds continued for 12^th week with outflow of $56mn this week.

*  The NAV line of India Dedicated Midcap funds has broken 1-year average level for the 1^st time since Mar’22. In 2022, the correction had stopped once it dropped there & we saw a year of sideways move before taking-off. However, in 2015 and 2018 period, it kept on sliding lower resulting in a longer period of pain for Midcap stocks.

* Importantly, the Midcap funds have not seen stronger underperformance over Large cap in the past 3-months of sell-off. This is largely because pressure on India until now is stronger from US domiciled funds which are largely ETF oriented. This curve can start showing bigger damage if we see outflows accelerating from dedicated funds and largely Japan domiciled funds since they have bigger allocation to active funds.

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