Notes · macro
FY26 so far: one shock explains most of it
Crude spiked, the rupee hit a record low, foreign money fled. Most of what happened to your portfolio this quarter starts upstream — not with your stocks.
By 15 May 2026, the rupee touched 96.14 to the dollar — a record low. It started the year near 90. In the same stretch, foreign investors pulled more than ₹2.2 lakh crore out of Indian equities — already more than they withdrew in all of 2025. If your portfolio felt strange this quarter, this is why. Not your stocks. The ground they stand on.
The idea
Most of the move since FY-end is one macro shock travelling downhill. It starts with crude oil and ends in your holdings, and every step in between is mechanical, not mysterious.
Retail investors instinctively look down — at the specific stock that fell. The more useful direction is up, at the shared cause that moved almost everything at once.
The chain
It runs in four steps, each one forcing the next.
A crude shock becomes a portfolio drawdown in four mechanical steps. Domestic investors (DIIs) are the shock absorber at the end of the chain.
Step 1 — crude. India imports most of its oil. When Brent pushed past $110 on the West Asia conflict, the import bill jumped.
Step 2 — the rupee. A bigger oil bill means more dollars bought with rupees. More dollar demand, weaker rupee — down to 96.14.
Step 3 — foreign money leaves. A falling rupee quietly eats a foreign investor’s returns even when stocks are flat. Add a strong US dollar, high US bond yields, and global capital chasing AI names elsewhere, and India looks less attractive. FPIs pulled a record ₹2.2 lakh crore.
Step 4 — your screen turns red. That selling has to land somewhere. It lands on prices.
Why it matters
If you think the problem is your stock, you make stock decisions — sell the laggard, chase the winner. If you understand the problem is a shared macro tide, you make different, calmer decisions: you ask whether the business changed (usually it didn’t), and you watch the upstream variable (crude) instead of the downstream symptom (your P&L).
There’s a second, hopeful half to this. Domestic institutional investors — mutual funds, insurers, pension money — bought through the entire foreign exit. That is new. A decade ago, a foreign stampede this size would have been a rout. This time, Indian money was the floor.
How to read it from here
- Watch crude, not the ticker. It’s the variable upstream of everything else this quarter. If it cools, the chain unwinds in reverse.
- Separate macro pain from business pain. Ask: did this company’s earnings or prospects actually change, or did it just get sold with everything else?
- Respect the rupee. A weak rupee helps exporters (IT, pharma) and hurts importers. The currency is quietly re-ranking sectors.
- Notice who’s buying. The FPI-out, DII-in tug-of-war is the structural story of FY26. It decides how hard the next shock lands.
The takeaway
When the whole market moves together, the answer is rarely in any single stock — it’s upstream. This quarter, almost everything traces back to a barrel of oil and a falling rupee. See the chain, and the red screen stops being a mystery.
Next in this series: the IT crash — a real GenAI break, or a sentiment overshoot?