Sensex Slides Into Bear-Market Territory in Dollar Terms as a Bruising Quarter Ends

For a foreign investor who put dollars into Indian large caps at the start of the year, 2026 has turned into a bear market. Measured in US dollars, the Sensex has fallen more than 20 per cent so far this year, crossing the threshold commonly used to define a bear market. The Nifty 50 is down 18.6 per cent on the same basis.

The number matters because it captures something the rupee-denominated index hides. In local currency, the Sensex is down about 14.9 per cent this year and the Nifty about 13.1 per cent. The gap between those figures and the dollar returns comes almost entirely from the rupee, which has lost 6.4 per cent against the dollar in 2026.

Worst since 2011

The last time Indian benchmarks did worse in dollar terms was 2011, when both indices lost close to 36 per cent. Among the major markets tracked in the comparison, only Indonesia has fared worse this year, with its main index down about 34 per cent.

The contrast with other markets is stark. South Korea's benchmark has climbed about 72 per cent this year and Taiwan's roughly 61 per cent, riding demand for AI and semiconductor stocks. Japan's Nikkei is up around 30 per cent and the S&P 500 about 12 per cent. Indian equities have been on the wrong side of that trade, and foreign money has followed the returns elsewhere.

Where the losses sit

The Sensex's value in dollars has shrunk by more than $372 billion in 2026, and ten heavyweights account for about 80 per cent of that loss. Reliance Industries alone has shed nearly $70 billion in dollar market value, HDFC Bank around $54 billion and TCS about $52 billion, followed by Infosys at roughly $32 billion and ITC at about $22 billion.

Foreign portfolio investors have withdrawn more than Rs 2.17 lakh crore from Indian shares over the past year. What has stopped the rupee-term fall from being worse is domestic money: mutual funds have put in about Rs 4.98 lakh crore over the same period, absorbing much of the foreign selling. High crude prices linked to the West Asia conflict, US tariff worries and slowing earnings growth have all fed the outflows.

A calmer final session

The quarter's last trading day, which also closes the first half of FY27, was quieter than recent sessions. The Sensex opened about 88 points lower at 72,441.15 but recovered as Brent crude eased. At around 2 pm it was up 315.62 points, or 0.44 per cent, at 72,844.69, while the Nifty was 30.85 points higher at 22,747.05. IT, PSU bank, oil and gas and chemical stocks led, while healthcare lagged.

That modest bounce does little to change the quarter's scorecard, which we previewed in our look at September's closing stretch.

What would change the picture

For the dollar-return story to improve, two things likely need to happen together: foreign selling has to slow and the rupee has to stabilise. Both depend heavily on crude oil and US bond yields. Until then, even a flat Sensex in rupee terms can keep losing value for overseas holders if the currency keeps sliding.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.