Dollar-adjusted Nifty returns remain stagnant since 2021

Equity markets have delivered subdued returns over the past 18 months, with gains since the September 2024 peak remaining modest, particularly when viewed in dollar terms.

While returns in rupee terms have been relatively restrained, the picture appears weaker for global investors. In dollar terms, market gains have effectively been erased, with indices slipping back to levels last seen in September 2021, largely due to the steady depreciation of the Indian currency.

The performance of the Indian rupee has been a key factor behind the erosion in returns, moneycontrol reported. During the financial year 2025–26, the currency declined by 11 per cent, marking its sharpest annual fall since FY2011–12.

Investor sentiment has also been affected by sustained foreign outflows. In March alone, foreign institutional investors offloaded equities worth a record Rs 1.2 lakh crore, reflecting a shift towards safer global assets amid heightened uncertainty.

Concerns have been further amplified by rising crude oil prices, driven by geopolitical tensions in West Asia. As a major energy importer, India remains vulnerable to higher oil costs, which can strain fiscal balances and weigh on economic stability.

The combined impact of currency weakness, capital outflows and elevated energy prices has contributed to a cautious outlook among investors, limiting the upside in domestic equity markets.

With PTI inputs