Historic Crash: Rupee Falls Below 90 - Uday Kotak Says ‘Time To Wake Up’

The Indian rupee breached the psychologically important 90-per-dollar mark for the first time on Wednesday. During intra-day trading, it hit a record low of 90.13 before recovering slightly and closing on a weaker note.

The rapid depreciation sparked renewed risk aversion among investors, dragging domestic benchmark indices away from their recent all-time highs. Both the Nifty 50 and Sensex extended their corrective phase for the second consecutive session, reflecting growing unease in the equity markets.

Veteran banker Uday Kotak commented on the rupee’s sharp fall, pointing to the immediate trigger while offering a longer-term perspective:

"Foreign selling of Indian stocks, both FPI & PE under FDI. Indian investors buying. Time will tell who is smarter. For now foreigners seem smarter. 1 year nifty $ return is 0. But this a long game. Time for Indian business to shake out of comfort zone."

In essence, Kotak highlighted relentless foreign portfolio and private-equity outflows (even under the FDI route) against strong buying from domestic institutions and retail investors. 

Over the past year, dollar-adjusted returns on the Nifty have been flat, making foreign investors appear prescient in the short term. However, he described the India growth story as a “long game” and urged Indian corporates to move out of their comfort zone to remain globally competitive.

Key Triggers Behind the Rupee Fall

Persistent dollar demand from importers, continued foreign portfolio outflows, softening capital inflows and uncertainty surrounding a possible India-US trade deal have collectively battered the currency. Despite the Reserve Bank of India’s regular interventions in the forex market, the central bank’s relatively muted response in recent sessions has allowed the slide to accelerate.

Market participants now await the RBI’s monetary policy outcome on December 5 for clearer signals on whether the central bank will adopt a more aggressive stance to defend the currency.

FII Outflows Intensify Pressure on Rupee and Equities

Foreign investors have pulled out over Rs 1.48 lakh crore from Indian equities in the calendar year 2025 so far. December alone has already seen Rs 4,335 crore of net selling till December 2, adding to the downward spiral in both the rupee and stock indices.

Banking Sector Faces Multiple Headwinds

The banking pack bore the brunt of today’s decline. Private-sector heavyweights such as HDFC Bank and ICICI Bank corrected sharply after the NSE announced revised weightage caps for derivatives-linked indices to reduce concentration risk.

Meanwhile, public-sector banks plunged after the Finance Ministry categorically ruled out any near-term increase in the 20% FDI ceiling, dashing hopes that had fuelled a 20%-plus rally in the PSU Bank index over the past three months.

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