India’s equity decline has a second dimension for overseas investors: currency movements can deepen losses even when share prices stabilise.
The CapTop | October 26, 2026
India’s stock market weakness in 2026 is putting two measures of performance under scrutiny: what investors earn in rupees and what those returns are worth in dollars.
The Nifty 50 fell 13.1% between the start of the year and October 26, according to a BusinessLine market comparison carried by TradingView. The same report put the rupee’s depreciation against the US dollar at approximately 5.6%.
Together, those movements illustrate why a falling equity market can become more difficult for overseas investors. A decline in share prices reduces the value of their holdings, while a weaker rupee reduces the dollars those holdings can buy.
Currency movements can widen the loss
Consider an illustrative investment worth $100 at the beginning of the period.
If the underlying Indian equity portfolio tracked a 13.1% decline, its value would fall to the rupee equivalent of $86.90 at the original exchange rate. If the rupee’s dollar value also fell by 5.6%, the investment would be worth approximately $82.03 after conversion.
That represents a combined decline of roughly 18%, before dividends, fees, taxes or currency hedging.
This is an illustration rather than a measured return for a particular fund. The exact result depends on transaction dates, the exchange-rate convention used and whether an investor hedged currency exposure.
The distinction matters because foreign investors compare opportunities across countries in a common currency. A market’s local performance tells only part of that story.
Overseas markets have set a demanding comparison
The figures supplied for this article show substantial gains in several international benchmarks alongside India’s decline.
| Benchmark | Reported 2026 year-to-date change |
|---|---|
| Taiwan TWSE | +59.0% |
| South Korea KOSPI | +29.8% |
| Brazil Ibovespa | +27.3% |
| Japan Nikkei | +23.5% |
| US S&P 500 | +11.4% |
| India Nifty 50 | −13.1% |
| Indonesia JCI | −38.0% |
Source: BusinessLine comparison carried by TradingView, reporting year-to-date performance as of October 26, 2026.
Within this selection, Indonesia was the only market with a larger decline than India. The comparison does not establish a ranking of every stock market worldwide.
It also requires care: benchmarks have different sector compositions, and local-currency changes are not equivalent to dollar returns. A fair investment comparison should use consistent dates, currency treatment and dividend assumptions.
Lower valuations need earnings support
Falling prices can reduce a market’s price-to-earnings ratio, provided earnings do not decline at the same pace. That can make shares less expensive relative to their earlier valuations.
However, a lower multiple does not establish that stocks are undervalued.
Investors also assess the durability of profits, financing costs and the potential for future growth. A market can trade below its previous valuation and still command a premium over competing destinations.
For India, the useful question is whether company earnings can support the prices investors are being asked to pay. Broad index valuations should also be examined alongside sector differences, since banks, technology companies and consumer businesses face different earnings conditions.
Foreign flows need a consistent definition
Foreign portfolio selling can weigh on share prices. When investors convert rupee proceeds into dollars, it can also contribute to currency pressure, although trade flows, interest rates and other capital movements influence the exchange rate too.
Flow figures should be compared carefully. Provisional exchange cash-market activity and depository-reported foreign portfolio investment cover different reporting scopes and should not be treated as interchangeable.
A single buying session also does not establish that a sustained selling trend has reversed. Several weeks of consistent data provide a more useful picture.
What to watch next
Three developments will help assess whether India’s relative performance is improving: the breadth of corporate earnings growth, the persistence of foreign investment flows and the stability of the rupee.
Domestic investors should distinguish their own rupee returns from the currency-adjusted experience of overseas investors. Both matter for understanding market conditions, but they answer different questions.
The Nifty’s decline alone cannot determine whether a recovery is near. A more complete assessment requires evidence that earnings, valuations and capital flows are moving into better alignment.
This article provides general market information and does not recommend buying or selling securities.
