For many Non-Resident Indians (NRIs), recent market volatility has raised an important question: Should they continue allocating capital to India when global markets, particularly the US, have delivered stronger returns over the past couple of years?

The debate has gained traction amid the AI-driven rally in US equities, a weaker rupee against the dollar and a temporary slowdown in corporate earnings.

For dollar-based investors, currency movement is another key consideration, with many assuming that rupee depreciation significantly erodes returns.

However, wealth managers argue that these concerns stem largely from short-term market cycles rather than a deterioration in India’s long-term fundamentals.

Historically, the rupee has depreciated at a much slower pace than commonly perceived, allowing strong rupee-denominated returns to translate into healthy dollar returns over longer investment horizons. More importantly, they say, India’s structural growth drivers remain intact despite periodic corrections.

Structural growth story remains intact

According to Feroze Azeez, Joint CEO at Anand Rathi Wealth, India’s biggest strength lies in where it stands in its economic journey.

Unlike several developed economies that are entering a phase of slower structural growth, India continues to benefit from favourable demographics, rising domestic consumption, manufacturing expansion and policy reforms. With nominal GDP expected to grow in double digits over the long term, the country offers a supportive backdrop for sustained corporate earnings growth, he said.
Azeez added that macroeconomic stability, supported by moderate inflation, prudent fiscal management and healthy foreign exchange reserves, provides greater visibility on earnings and valuations. “The investment case for India is based on long-term structural growth and compounding, rather than short-term market movements,” he said.

Domestic investors are becoming the market’s anchor

Another key change over the past decade has been the growing influence of domestic investors.Domestic institutional ownership has now overtaken foreign portfolio ownership for the first time in modern market history, aided by record SIP inflows that continue to provide a steady source of long-term capital. This has made Indian equities less vulnerable to swings in global risk appetite.

Shiv Gupta, Founder and CEO of Sanctum Wealth, believes this transition is one of the most underappreciated developments in Indian markets.

According to him, India’s growth is increasingly being funded by its own households through rising savings, domestic consumption and expanding capital markets. “A market supported by its own savers is more resilient than one dependent on foreign flows,” he said, noting that this explains why Indian markets now tend to recover faster from bouts of global volatility.

He also points out that the broader investment case remains anchored in long-term drivers such as rising incomes, financialisation of savings, infrastructure spending and a significantly healthier banking system than a decade ago.

Earnings, valuations support the long-term case

While earnings growth has moderated in the recent past, analysts expect corporate profitability to improve over the next two financial years. Combined with improving balance sheets and easing valuations, many wealth advisors believe the current environment offers an attractive entry point for patient investors.

Tarun Birani, Founder and CEO of TBNG Capital Advisors, says India’s appeal lies in its ability to deliver earnings compounding over long periods rather than quarter-to-quarter performance.

He notes that banks are well-capitalised, corporate balance sheets are among the strongest seen in over a decade and government-led capital expenditure continues to support economic activity. At the same time, valuations have moderated, even as corporate return on equity has room to improve, creating favourable conditions for long-term investors.

Birani also highlights the rapid rise in household participation in equities and mutual funds over the past decade, describing it as a structural “domestic capital flywheel” that helps cushion market corrections.

For NRIs, he believes India offers a unique combination of long-term wealth creation and alignment with future financial goals in rupee terms. “You’re participating in a long-run compounding story that also maps to your family, property and eventual return to India,” he said.

What Should NRI Investors Do?

For wealth managers, the message is clear: while short-term performance may influence sentiment, India’s investment case continues to rest on structural growth, improving corporate fundamentals and the increasing resilience of its domestic capital markets—factors that are likely to play out over years rather than quarters.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)

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There was a time when a single tweet could move Bitcoin by 10%. When a celebrity endorsement sent token prices through the roof overnight. When “to the moon” counted as an investment thesis for millions of retail crypto investors around the world.

Today, that market has been replaced by more serious, more structural, and more interesting market participants. The next Bitcoin rally will not be driven by narrative. It will be driven by liquidity. And if you don’t understand how liquidity moves, you will keep misreading every crypto cycle that follows.

What the Numbers Are Telling Us

Over the past eight months, more than $10 billion has moved out of Bitcoin spot ETFs, and that exodus has been a major driver of the downturn we’re witnessing. In 2024, inflows into those same ETFs powered Bitcoin to new all-time highs. Institutional capital pulled back, the pillar supporting the rally faded, and retail investors simply did not have the conviction to hold the market up on their own.

Spot ETFs now hold 6-7% of circulating supply, which means every billion dollars of net flow ripples directly into spot prices and through the rest of the crypto market.

How the Market Grew Up

The 2021 bull run was the last great hype-driven market. Retail FOMO, social media momentum, and speculative excess pushed Bitcoin to its then all-time high. Then came the unravelling of Luna, Celsius, and FTX. Each collapse eroded the casual investor’s willingness to act on hype without scrutiny.

At the same time, the market’s composition changed underneath it. The SEC’s approval of spot Bitcoin ETFs in January 2024 brought institutional capital into the space through regulated vehicles. BlackRock’s iShares Bitcoin Trust alone commands approximately $43 billion in assets under management as of June 2026.

These are investors who allocate based on macro conditions, rate environments, and portfolio construction frameworks with a long-term view, the same forces that move equity and bond markets.

Liquidity Is the Variable That Matters Now

Empirical research shows a significant strengthening in the relationship between global M2 money supply growth and Bitcoin price appreciation, with roughly a 90-day lag and correlation coefficients reaching 0.78 during the 2020-2023 period.
Put simply, when global liquidity expands, Bitcoin goes up. When it contracts, Bitcoin comes under pressure. That three-month lag means the direction of global money supply today is a leading indicator of where Bitcoin is headed next quarter, whether you’re watching for it or not.
Stronger-than-expected inflation readings and elevated bond yields have complicated the picture for Federal Reserve policy. Persistent energy price pressures and geopolitical instability now have investors worried that rate cuts could be delayed, and that makes for a less supportive environment for risk assets like Bitcoin.

What the On-Chain Data Is Actually Saying

Here is where it gets interesting. Beneath the price weakness, the network is telling us a different story altogether. CryptoQuant’s Bitcoin Network Activity Index has climbed steadily since January and recently hit its highest level since late 2024. Daily Bitcoin transactions have crossed 800,000, nearing the highs of the previous bull cycle.

Even the selling pressure from ETF redemptions has not triggered a rush of coins onto exchanges for liquidation, which tells you that some of these outflows are internal portfolio rebalancing, not investors walking away from Bitcoin.

What the Next Rally Needs

Any rotation back into growth positioning would likely pull Bitcoin along with it, re-anchoring the asset to the liquidity backdrop. An ETF flow reversal would provide direct support to prices.

Watch for a softening in Fed language, easing inflation data, and a resolution to the geopolitical tensions that have kept oil prices elevated and rate-cut expectations suppressed. Any one of these could meaningfully improve liquidity conditions, and when liquidity returns, Bitcoin has consistently been among the first assets to reflect it.

The next leg of this cycle will not announce itself through celebrity endorsements or viral posts. It will show up quietly, in ETF flow data, in M2 expansion numbers, and in what the bond market is telling us about where rates are headed.

The investors who stand to benefit most from the next Bitcoin rally are the ones watching the Fed, tracking ETF flows, and understanding that Bitcoin’s price today is largely a function of how much capital the global financial system is willing to allocate to risk assets.

(The author Prateek Gupta is Head of Business, Mudrex)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

For decades, investors have relied on forecasts of economic growth, consumer demand and corporate earnings to identify winning investments. However, renowned financial historian and investment strategist Edward Chancellor argues that a far more reliable way to generate long-term returns is by studying the capital cycle—an approach that focuses on the supply side of an industry rather than attempting to predict demand. According to Chancellor, understanding how capital enters and exits industries can help investors identify opportunities that the broader market often overlooks.

In his book, “Capital Returns“, Edward Chancellor explains the investment philosophy employed by Marathon Asset Management in London between 2002 and 2015. The book advocates the capital cycle approach, arguing that investors can achieve superior long-term returns by focusing on industry supply dynamics and capital allocation rather than relying solely on demand forecasts.

Looking Beyond Demand

Traditional investing tends to revolve around estimating future demand. Investors spend significant time predicting sales growth, consumer spending patterns and economic trends. Chancellor believes this approach has limitations because demand is notoriously difficult to forecast with precision.

Instead, the capital cycle approach shifts attention to supply. It examines how much capital companies are investing, whether industry capacity is expanding or shrinking, and how these changes are likely to affect future profitability. Since supply trends are generally easier to observe than demand, they can offer a stronger foundation for long-term investment decisions.

How the Capital Cycle Works

Every industry experiences periods of expansion and contraction.

When companies earn high profits, they attract competitors and fresh investment. Existing firms increase capacity while new entrants join the industry. Over time, this excess investment creates oversupply, intensifies competition and puts pressure on prices and profit margins.

As profitability declines, weaker players exit the market, investment slows and industry capacity contracts. Reduced supply eventually restores pricing power and profitability, setting the stage for a new cycle of growth.

Investors who can identify these turning points before the broader market has an opportunity to benefit from improving fundamentals and attractive valuations.

Why Markets Often Miss the Cycle

Chancellor believes markets frequently fail to recognize changes in the capital cycle because investors focus excessively on short-term developments. Quarterly earnings, macroeconomic headlines and demand forecasts often dominate investment decisions, while structural changes in industry supply receive far less attention.
This creates opportunities for patient investors who are willing to look beyond near-term uncertainty and study how capital allocation is reshaping an industry’s competitive landscape.

Behavioural Biases That Influence Investors

The capital cycle approach also explains why investors repeatedly make similar mistakes.One common error is competition neglect, where investors underestimate how increased investment across an industry will eventually reduce profitability.

Another is base-rate neglect, where market participants focus only on current conditions without considering how past investment decisions continue to influence today’s returns.

Chancellor also points to narrow framing, where investors analyse companies in isolation instead of comparing them with similar situations across industries or history. Finally, extrapolation bias causes investors to assume current trends will continue indefinitely, even though business cycles are inherently cyclical.

Characteristics of Attractive Capital Cycle Opportunities

According to Chancellor, the most attractive opportunities are often found in industries where capacity growth has slowed, competition has become more disciplined and supply conditions are improving.

Industries with a limited number of rational competitors, high barriers to entry, sensible capital allocation and pricing discipline tend to generate superior long-term returns. Conversely, sectors experiencing aggressive capacity expansion or irrational competition often see profitability deteriorate over time.

The Importance of Management

A company’s management plays a crucial role in the capital cycle.

Strong management teams allocate capital prudently rather than pursuing growth for its own sake. Investors should evaluate how companies approach capital expenditure, research and development, acquisitions, debt management, share buybacks and equity issuance. Businesses that allocate capital efficiently are generally better positioned to create sustainable shareholder value throughout the cycle.

Why Long-Term Investors Have an Edge

One of Chancellor’s central arguments is that long-term investing works because there is less competition for information that remains valuable over many years.

While most market participants concentrate on quarterly earnings and short-term news, long-term investors can benefit by studying structural industry trends, capital allocation decisions and changes in supply dynamics. These insights often have a much longer shelf life and can produce superior returns over an extended investment horizon.

Key Takeaways for Investors

The capital cycle approach reminds investors that profitability is determined not only by demand but also by how much capital an industry attracts. Excess investment eventually destroys returns, while disciplined investment and shrinking capacity often lay the foundation for future profitability.

Rather than chasing popular sectors during periods of peak optimism, long-term investors should monitor supply trends, management quality and capital allocation decisions. By identifying industries where the capital cycle is turning in favour of stronger returns, investors can position themselves ahead of the market and improve the odds of generating sustainable long-term wealth.