Sensex falls 20% in dollar terms as rupee weakens and foreign investors retreat

India's benchmark Sensex index has fallen over 20% in dollar terms so far in 2026, its steepest decline in 15 years, driven by weak foreign investor sentiment and rupee depreciation. The Nifty has dropped 18.6%, making both indices the second-biggest laggards among major global markets after Indonesia. In rupee terms, the Sensex is down 14.9% and Nifty 13.1% this year. Foreign investors measure returns in dollars, so the rupee's 6.4% decline has amplified losses. Key factors include slowing earnings growth, a shift toward AI-driven markets like South Korea and Taiwan, US tariffs, and oil price spikes following the West Asia war. Domestic mutual fund inflows of ₹4.98 lakh crore have offset foreign outflows of ₹2.17 lakh crore, cushioning the market. The Sensex's dollar market capitalization has fallen by over $372 billion, with Reliance Industries, HDFC Bank, and TCS accounting for the largest declines.