India’s foreign-capital problem is no longer just an equity-market story. Foreign portfolio investors (FPIs) have withdrawn nearly ₹2.60 trillion ($30 billion) from Indian equities so far this year, as the rupee (INR) weakens and US 10-year Treasury yields approach 5%. The shift presents a varying risk-return situation for Indian crypto traders who hold dollar-linked assets such as Bitcoin (BTC) and stablecoins.
India’s economy continues to grow strongly, with real GDP rising 7.8% in the April–June quarter of FY27. According to sources, on October 6, 2026, the World Bank also revised its FY27 growth forecast from 6.6% to 7.1%, citing stronger-than-expected growth and resilient domestic demand. However, foreign portfolio investors have been selling Indian equities aggressively.
During the three trading sessions ended October 1, they sold about ₹30,000 crore worth of shares, whereas net equity outflows in September were about ₹35,860 crore. So far for the calendar year 2026, FPI selling from Indian stocks has hit around $30 billion, which is higher than the record for the full year 2025 and is likely to become the largest annual outflow on record.
Meanwhile, the divergence is more about returns than growth. FPIs are return-seeking capital, and what matters is a dollar return after currency changes, and the opportunity cost of holding Indian assets rather than risk-free or higher-yielding assets elsewhere.
Three external forces are changing the risk-return equation for foreign capital in India: elevated US Treasury yields, high oil prices and a weakening rupee. As of October 6, 2026, the US 10-year Treasury yield was around 5.26%. At these levels, higher dollar returns from US Treasuries are becoming more attractive, drawing capital toward US assets and away from riskier markets.
Meanwhile, Brent crude has been mostly above $100 a barrel in recent weeks and is now trading at $98.45 per barrel, adding to India’s external financing requirements and exerting pressure on the rupee.
Besides that, the rupee is becoming a direct drag on returns of foreign investors. At press time, USD/INR traded at 96.34, with the rupee down nearly 7–8% in 2026. For an FPI, a flat or moderately positive return in rupees could turn into a loss once the proceeds are converted back into dollars. This makes Indian assets less attractive, even as the underlying economy continues to grow.
(adsbygoogle = window.adsbygoogle || []).push({});Heavy and sustained foreign portfolio investor selling directly pressures India’s risk assets, starting with equities. The sentiment was most negative for large caps, with the Nifty 50 shedding over 3,500 points from its recent highs close to 26,373 and posting double-digit YTD losses as the rally in these stocks was the least.
The Indian cryptocurrency trading market is structurally long US dollar. Bitcoin, Ethereum, and stablecoins like USDT are priced and settled in dollars. As long as the rupee is depreciating, the same amount of BTC or USDT will be more valuable in rupees. For instance, a price shift from ₹90 to ₹96-100 per dollar would raise the INR value of the crypto assets held and raise the INR amount available on withdrawal, subject to tax rules.
A weaker rupee directly changes how Indians are engaging with BTC and USDT, enhancing its returns and interest in stablecoins as dollar proxies. Since global crypto assets are traded in USD, the movement in USD/INR rates also produces a two-fold impact on the market for domestic investors.
Indian crypto traders should watch US 10-year Treasury yields, crude oil prices, the rupee and RBI actions, FPI flow data, global risk appetite and Bitcoin’s dollar price. A combination of higher US 10-year Treasury yields and oil prices may continue to attract capital to dollar assets, exerting pressure on the rupee. A further decline in the Rupee, ongoing selling by FPIs, or a lower BTC price would shape the net INR outcome.
