Indian investors may see 13–15% CAGR, but Rupee fall will erode gains: Wealth expert

The Indian rupee tumbled to a fresh record low against the US dollar this week, weighed down by concerns over the economic fallout of steep new US tariffs and persistent foreign outflows. Wealth educator Akshat Shrivastava offered a sobering view for investors. According to him, Indian equities could still deliver a 13–15% CAGR over the next three years. However, with the rupee expected to continue depreciating, returns in dollar terms would shrink to 8–10% CAGR.

Shrivastava argued that India’s markets remain heavily dependent on domestic flows via SIPs, since FIIs are holding back amid policy uncertainty and currency risks. While reforms in taxation and continuity in economic policies could change sentiment, near-term prospects hinge on local participation.

He also flagged a structural weakness: India’s absence from the global AI boom. Unlike US tech giants such as NVIDIA, which is valued at $4 trillion and growing at 50%+ CAGR, Indian markets lack credible AI plays. Small- and mid-cap stocks may offer bursts of high growth but carry “crazy high risk,” he warned. Without the AI catalyst, Indian equities are likely to underperform global peers in USD terms over the next five years.

Still, Shrivastava noted that short-term trading opportunities will remain abundant, especially in periods of high volatility like the present. However, generating sustainable alpha over 3–5 years will be difficult.

FIIs, DIIs

After two straight months of losses in the futures and options (F&O) segment, the Nifty faces another challenging stretch, with September rollovers indicating a firm bearish stance from foreign institutional investors (FIIs). FIIs offloaded nearly $3 billion worth of equities in August, extending their selling streak and adding pressure to already fragile market sentiment.

The bearishness is evident in their positioning. FIIs carried forward 169,000 net short contracts into the September series, up from 138,000 shorts at the start of August. SBI Securities noted the FII long-short ratio fell further to 8.24%, marking its longest stretch below 20% since July 11. This, the brokerage said, underscores persistent caution amid global trade headwinds and domestic volatility.

August saw a tug-of-war between optimism and pressure. Fresh US tariffs on Indian goods rekindled trade tensions, while a mid-month GST revision proposal briefly boosted auto stocks by 5–15% and lifted broader sentiment. However, the rebound quickly faded under heavy FII selling and profit-booking, according to Nuvama Alternative & Quantitative Research.

Looking ahead, global trade developments are likely to steer September’s performance. Nuvama warned that markets may remain range-bound, offering opportunities for both bulls and bears. Historical trends also provide little comfort, with September closing lower nearly 60% of the time over the past decade, delivering an average return of –0.4%.

Rollovers were strong, however. Nifty futures rolled at 84% versus the three-series average of 74%. Market-wide rollovers came in at 92%, slightly above average, with stock futures rollovers at 94%, suggesting traders are willing to carry risk forward despite uncertainty.