Recent observations by Uday Kotak shed light on how decisions made by global investors are influencing the Indian stock market, with domestic investors stepping in as buyers while international participants withdraw their capital. At the same time, the Indian rupee has weakened beyond 90 against the US dollar, triggering renewed concerns about market sentiment, macroeconomic stability and the world’s confidence in India’s financial environment. Kotak, Founder and Director of Kotak Mahindra Bank, has provided a candid assessment of current market conditions and the forces driving them.
Kotak stated that the sharp depreciation of the rupee can be directly linked to heavy selling by foreign investors. Both foreign portfolio investors (FPIs) and private equity funds operating through FDI routes have been cutting their exposure to India, leading to continuous outflows that have pushed the rupee to a historic low. The currency slipping past the 90 mark reflects not only risk-off behaviour in global markets but also uncertainty driven by geopolitical tensions and worldwide financial instability.
Economists add that wider macroeconomic factors are contributing to the rupee’s weakness. Global capital movements, interest rate gaps between countries and the shift toward safe-haven currencies during geopolitical uncertainty are exerting downward pressure. India’s dependence on imported crude oil, electronic goods and gold, combined with inflation differences with trading partners and a growing current account deficit, has intensified the strain. Rahul Gupta of Ashika Group noted that the breach of the 90 level is a cumulative result of persistent capital outflows, structural trade imbalances and the continuous strengthening of the US dollar rather than a sudden development.
Even as foreign investors are selling aggressively, Indian investors—including retail participants, mutual funds and domestic institutions—continue to buy equities. However, the scale of foreign selling is overshadowing domestic buying, making global flows the dominant influence on market direction. Kotak drew attention to this contrast by remarking that time would reveal who is ultimately making the smarter bet, though for the moment, foreign investors appear to be driving the market more effectively.
Kotak further highlighted that when returns are evaluated in US dollar terms rather than rupee terms, foreign investors have seen little benefit from Indian equities over the past year. With the one-year Nifty return effectively flat after adjusting for currency depreciation, the attraction of the Indian market for international participants becomes more muted in the short run.
Despite the present volatility, Kotak stressed that equity markets must always be viewed through a long-term lens. He sees the current phase as a reminder for Indian corporations to strengthen their competitive positioning, innovate and avoid complacency. In his view, the ability of businesses to adapt, improve efficiency and push beyond their comfort zones will determine whether India captures lasting value from its economic growth story rather than relying on temporary liquidity cycles or fluctuating global risk sentiment.
