Why would a country that requires close to $90 billion in net foreign capital annually to create jobs, build productive capacity, and sustain rapid growth permit $30 billion of capital to flow abroad, thereby contributing to pressure on the rupee? asks Debashis Basu.
Foreign Portfolio Investors (FPIs) withdrew nearly Rs 33,000 crore from Indian equities in May, bringing the total outflow for 2026 to Rs 2.25 lakh crore, driven by weak earnings growth, rupee depreciation, and more attractive opportunities in other global markets.
Foreign Portfolio Investors (FPIs) have withdrawn Rs 27,048 crore from Indian equities so far in May, bringing the total outflows for 2026 to Rs 2.2 lakh crore, driven by global macroeconomic and geopolitical uncertainties.
Indian benchmark equity indices experienced a significant downturn, with the Sensex plummeting over 800 points and the Nifty falling sharply, driven by rising crude oil prices, geopolitical tensions, and foreign capital outflows.
The rupee weakened to a record low against the US dollar due to Gulf tensions, rising oil prices, and foreign capital outflows.
The primary objective should be to figure out a way to grow at 7 to 7.5 per cent with inflation around 4 per cent. Any policy that can help us get there must be experimented with. Those that work should stay. Those that do not should go, suggests Karan Bhasin.
Foreign investors have withdrawn over Rs 88,000 crore from Indian equities this month, driven by geopolitical tensions, a weak rupee, and concerns about rising crude oil prices.
The rupee recovered to 95.18 against the US dollar after hitting an all-time intra-day low of 95.44. The recovery was supported by possible RBI intervention amid renewed Gulf tensions and rising crude oil prices.
The Indian government is set to accelerate reforms, including measures to enhance foreign direct investment, speed up divestment, and boost asset monetisation, to maintain economic growth despite rising fuel and fertiliser import costs driven by the West Asia crisis.
The rupee slumped 5 per cent in 2025 as persistent capital outflows from foreign investors, alongside heightened dollar demand from importers, making it one of the worst-performing Asian currencies.
Rupee slumped 69 paise to an all-time low of 92.18 against the US dollar in early trade on Wednesday, as a sharp spike in crude oil prices amid geopolitical tensions following the escalation of the US-Iran conflict weighed on investor sentiment.
The Indian rupee depreciated 16 paise to settle at a fresh lifetime low of 96.86 against the US dollar, marking its ninth consecutive session of decline, driven by elevated global crude prices and a strong dollar.
Indian benchmark indices Sensex and Nifty closed marginally lower due to profit-taking, following the Reserve Bank of India's decision to keep the repo rate unchanged while lowering its growth expectations for the current fiscal year and forecasting higher inflation.
Foreign Portfolio Investors (FPIs) have withdrawn nearly Rs 43,000 crore from Indian equities in the first week of June, contributing to a total outflow of Rs 2.67 lakh crore in 2026, driven by a global shift towards technology and AI-linked opportunities and persistent rupee depreciation.
The Reserve Bank of India (RBI) has debunked reports of gold sales, stating that its physical stock of gold remains unchanged at 880.52 tonnes, countering claims of selling approximately USD 12 billion to protect foreign-currency reserves.
The Indian rupee depreciated by 34 paise to close at 93.78 against the US dollar, marking its third consecutive session of decline. This fall is attributed to escalating crude oil prices driven by uncertainty surrounding US-Iran peace talks and fresh attacks in the Strait of Hormuz, alongside significant foreign institutional investor outflows from domestic equity markets.
India has emerged as the most impacted market within emerging economies, experiencing $3.7 billion in outflows over the past three weeks, matching the total outflows from the entire emerging market basket, as global equity funds turn negative for the first time since January 2026 due to escalating geopolitical tensions.
'When I look at India's relative valuations, these are by far the lowest I have seen in my 35-year career.' 'The relative 12-month trailing performance is among the weakest I have seen, and foreign investor positioning is at a 16-17 year low.'
The Indian rupee depreciated 20 paise to close at a fresh all-time low of 94.88 against the US dollar, driven by surging Brent crude oil prices, hovering around USD 115 per barrel, and persistent foreign capital outflows.
The report notes that equities had faced pressure from elevated valuation premiums, subdued nominal gross domestic product (GDP) and earnings growth, sustained foreign portfolio investor (FPI) selling, artificial intelligence (AI) infrastructure euphoria, and external shocks including US tariffs and a spike in crude oil prices due to geopolitical tensions in West Asia. However, several of these factors are now reversing.
Foreign Portfolio Investors (FPIs) have withdrawn over Rs 62,853 crore from Indian equities in the first fortnight of June, bringing the total outflows for 2026 to Rs 2.87 lakh crore, surpassing the entire 2025 figure, driven by geopolitical tensions, global economic growth concerns, and a weakening rupee.
The measures announced by it risk backfiring, disrupting the foreign exchange market, and intensifying the very pressures they seek to contain, with broader consequences for the economy points out Rajeswari Sengupta.
In the currency markets, the rupee lost another 10 paise to close at 1-week low of 63.54 against the US dollar
The Indian rupee rebounded against the US dollar after the Reserve Bank of India (RBI) restricted banks' net open positions in dollars. This move prompted banks to sell dollars, providing temporary support for the rupee amidst ongoing geopolitical tensions and rising oil prices.
Indian benchmark stock indices, Sensex and Nifty, closed nearly 1 per cent lower due to surging crude oil prices, weak global market trends, and significant foreign fund outflows, with geopolitical tensions and inflation concerns further dampening investor sentiment.
The Indian rupee weakened to a record intra-day low against the US dollar due to a strengthening greenback, continuous foreign capital outflows, and elevated global crude oil prices amidst the West Asia conflict.
The Indian rupee weakened against the US dollar due to sustained foreign fund outflows and uncertainties in West Asia, although lower crude oil prices and a positive opening in domestic equity markets limited the losses.
The Trinamool Congress has launched a sharp attack on the Narendra Modi government over rising fuel prices, economic concerns, and exam irregularities, accusing the Centre of betraying citizens.
Indian stock markets saw a significant rebound, with the Sensex jumping nearly 790 points, primarily fuelled by strong buying interest in telecom, pharma, and private banking shares, despite a volatile trading session and a weakening rupee.
India's software and engineering exports may take a hit and the country may also face larger capital outflows.
Foreign Portfolio Investors (FPIs) have withdrawn Rs 14,231 crore from Indian equities so far in May, extending the total outflow for 2026 to over Rs 2 lakh crore, driven by persistent global macroeconomic uncertainties including inflation, interest rates, and geopolitical risks.
Markets extended losses after the first hour of trade with HDFC Group shares leading the decline.
Domestic Institutional Investors (DIIs) have significantly increased their holdings in Nifty 500 companies, reaching a record 20.9 per cent by the end of March, while Foreign Portfolio Investors (FPIs) reduced their ownership to an all-time low of 17.1 per cent, according to Motilal Oswal Financial Services.
The Indian rupee experienced a significant surge against the US dollar following the Reserve Bank of India's measures to restrict banks from onshore forward markets. Despite this, the rupee remains under pressure from foreign capital outflows, a strong dollar, and rising crude oil prices.
Foreign investors pulled out Rs 21,000 crore (around $2.3 billion) from Indian equities over the last four trading sessions amid deteriorating global risk sentiment triggered by the West Asia crisis.
Heavy offloading by foreign portfolio investors also weighed on the rupee
'In all these years of rupee depreciation, of rising oil prices, of inflation caused by import dependence, not one leader had the courage to look the people in the eye and say: Please do this for your country.'
From the 30-share Sensex blue-chip pack, Tata Steel, Zomato, Larsen & Toubro, Tata Motors, Adani Ports, Tata Consultancy Services, HDFC Bank and NTPC were the major laggards. Nestle, Hindustan Unilever, Mahindra & Mahindra, Kotak Mahindra Bank, Asian Paints and Bharti Airtel were among the gainers.
The global artificial intelligence (AI) boom has significantly reshaped equity markets, with Taiwan surpassing India to become the world's fifth-largest stock market. India has seen its market capitalisation decline by 7% year-to-date, while AI-linked economies like Taiwan and South Korea have surged.
The central bank is yet to consider actions such as a rate hike or mobilising dollar inflows from non-resident Indians to boost forex reserves as it cannot afford to continue with them for long when the rupee's internationalisation tops its agenda, explains Tamal Bandyopadhyay.
