The weakening of the Indian rupee has strengthened the case for global equity investing. And the argument is two-fold: A globally diversified portfolio not only improves the potential for better long-term returns in rupee terms but also helps safeguard purchasing power over time.
Indian equities have delivered competitive and sometimes superior returns than their US counterparts, supported by strong domestic growth and improving corporate profitability. Yet, when Indian investors measure actual wealth creation in rupee terms, investments in the S&P 500 have often ended up generating higher returns as compared to the Nifty 50.
The reason lies not just in equity performance, but in currency.
Rupee depreciation & impact for Indian investors
As per a Vested Finance analysis, the rupee has weakened against the dollar at a steady pace for more than 10 years, losing roughly 3% a year. In 2025 alone, the rupee has lost 6% as it plummeted to a record low of 91. Rupee has recovered some lost ground, but it still hovers around the 89.50 level.
A part of the portfolio, therefore, needs a currency anchor that holds value over time. To understand it better, ₹1 lakh invested in S&P 500 and Nifty 50 at the same time in 2015 would yield a higher return when gains are compared in rupee terms, even as the absolute percentage return for the Indian barometer remains slightly higher.
₹1 lakh invested in Nifty 50 in the last 10 years would have amounted to ₹3,32,460 for the 232% rise in the index. Meanwhile, the same amount in the S&P 500 would have become ₹4,36,100, with the Vested study assuming the rupee at 88.68 per US dollar, despite a 230% rise in the US market index.
The higher gain of ₹1,06,000 is due to rupee depreciation. Investors must note that since the rupee has depreciated further, at current levels of around 89.50, the returns would be even higher by ₹1,13,200.
Harshal Dasani, Business Head at INVAsset PMS, said this analysis shows how currency becomes an invisible yet powerful driver of wealth creation over long holding periods.
Indian investors who allocated to the S&P 500 over the last decade did not just benefit from steady dollar-denominated equity compounding, but also from a structural rupee depreciation — from the mid- ₹60s per dollar in 2015 to close to ₹88 in 2025, he said.
“The takeaway is not to chase overseas markets opportunistically, but to build structural diversification. Indian equities remain core for growth, but global equities serve as insurance against currency erosion and macro shocks.”
Moreover, a portfolio built only in rupees grows on terms set by a currency that continues to lose ground globally. This can hinder the many goals Indian households now plan for, like education, healthcare, travel, and retirement, which are linked to dollar-based costs.
This analysis makes a case for diversification, especially as it helps preserve international purchasing power, balances domestic economic risks and aligns assets with future dollar-linked expenses.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
