macroeconomic uncertainty

Foreign portfolio investors have withdrawn over Rs 2 lakh crore from Indian equities in 2026, with May seeing further outflows of Rs 14,231 crore. Persistent global macroeconomic uncertainties, including inflation and interest rate concerns, are driving this trend, making developed market debt more attractive. Despite overall selling, some selective interest remains in specific sectors and growth-oriented mid and small-cap stocks.

The Indian rupee hit an all-time low against the US dollar, falling to 96.1650 amid escalating Middle East conflict and rising oil prices. This depreciation intensifies concerns over India's macroeconomic outlook, with authorities implementing measures to curb the decline and stabilize the currency.

Bengaluru-based Scapia, a travel-fintech innovator, has secured $63 million in a funding round led by General Catalyst. This capital infusion will fuel the expansion of its integrated travel and financial services, including co-branded credit cards and AI-driven product development. The company aims to enhance user experience across bookings and payments, with domestic travel bookings showing significant growth.

PRO FX Tech reported a 37% revenue surge to Rs 177 crore and a 24% net profit increase to Rs 15 crore in FY26. This growth was fueled by strong demand for premium audio products and enhanced execution across retail and business segments, despite macroeconomic headwinds. The company anticipates exceeding Rs 200 crore in revenue this fiscal year.

Foreign investors have continued their withdrawal from Indian equities, with net outflows reaching Rs 27,048 crore this month. This selling spree, totaling Rs 2.2 lakh crore in 2026, is driven by global macroeconomic uncertainty, geopolitical tensions, and a stronger US dollar making developed markets more attractive.

India's transportation fuel demand growth is set for a sharp slowdown in late 2026. Higher prices, government conservation efforts, and a weakening rupee are impacting mobility. Analysts have significantly cut growth forecasts, with petrol demand facing the steepest decline due to reduced commuting and discretionary travel.

LTM boosted fresher hiring by 40% and deployed over 1,500 AI agents in FY26 to enhance productivity. Simultaneously, the company increased reliance on overseas subcontractors, particularly in the US and Europe, while its permanent employee count grew overall, driven by India.

Persistent foreign fund outflows and the rupee sliding to record lows have further dampened sentiment, prompting investors to stay cautious and intensify selling across equity markets.

In fact, ⁠IT has been the worst-performing major sector in the Indian market over the past 12-18 months. In May, 2026, the Nifty IT index touched a near 3-year low, losing more than a fourth of its value since the start of the year.

Indian markets brace for volatility this week, driven by US-Iran tensions and crude oil price swings. Investors will also scrutinize crucial inflation data from India and the US for interest rate clues. Key corporate earnings are also on the radar, alongside foreign investor activity, shaping market sentiment.

One of the key triggers behind the market decline was renewed uncertainty surrounding the US-Iran conflict. US President Donald Trump said the ceasefire with Iran was “on life support” after Tehran rejected Washington’s latest proposal aimed at ending the conflict. Trump described Iran’s demands as “garbage.”

Uday Kotak, founder of Kotak Mahindra Bank, urged India to reduce its reliance on foreign capital and cultivate a robust domestic pool of long-term risk capital for true self-reliance. He emphasized that companies should prioritize building businesses with a three-to-five-year vision over short-term stock price fluctuations, advocating for stronger domestic private equity and venture capital ecosystems.

Economists believe India’s foreign-exchange reserves are still sufficiently strong to shield the rupee from the oil price shock triggered by the Iran conflict, with the country’s reserve buffers remaining far healthier than the levels seen during the 2013 taper tantrum.