New Delhi, May 22 -- The sharp fall in the Indian rupee over the past few months has largely been driven by strong domestic inflows through systematic investment plans (SIPs), which provided an exit route for foreign investors seeking to cash out of India's expensive equity market, according to a recent note by Jefferies.
The brokerage said a potential correction in valuations, unwinding of the artificial intelligence (AI) trade, and reopening of the Strait of Hormuz for smoother business activity could help reverse the ongoing foreign outflows.
"Not current account deficit (CAD), but all-time low capital flows is the culprit for INR pressure. Equity market-driven outflows accounted for USD 78 billion over the last two years, as strong do...