External Vulnerability Index.
India's exposure to a sudden stop: foreign flows, the rupee, and the external account in one fragility gauge.
The headline index
The 2026 story the supply-side indices missed: FPI pulled ₹2.2 lakh cr and the rupee slid 85→96. The index reads 97: external vulnerability easing 6% over the year. Read it against the Domestic Capital Index to see if local money can absorb the exodus.
The 5 pressure points
Latest reads anchor to official 2025 releases (cited per pressure point).
Net foreign-portfolio selling of Indian equities: the hot-money tide. Higher = heavier exodus.
Source ↗ NSDL / Free Press Journal, Sept 2026The exchange rate: a weaker rupee erodes dollar returns and amplifies the outflow loop. Higher = weaker.
Source ↗ Gulf News / exchangerates.org.uk, 2 Sep 2026Reserves spent defending the rupee, vs the Feb-2026 peak. Higher = more firepower burned. Cover itself stays a healthy ~11 months.
Source ↗ RBI WSS / IANS, 4 Sept 2026The external financing need. A wider CAD must be funded by exactly the flows that are leaving. Higher = worse.
Source ↗ RBI, 1 Sept 2026The pull of US real yields: the higher they sit, the higher the bar for taking emerging-market risk. Higher = stronger pull out.
Source ↗ Gravitywell estimate (US 10y TIPS)Smoothed, rebased, winsorised, weighted.
How it's built
Foreign flows, the rupee, reserve buffer, the current account, and the US-yield pull: the channels through which an external shock reaches India.
Every pillar points the same way: higher = more vulnerable. A rising EVI is a warning, and the colour coding flips to red accordingly.
3-month average, then standardised over the series (z-score): the right normalisation for wide-range, near-zero series (FX, FPI, a CAD that flips to surplus) that ratio-rebasing would distort. Higher = more std-devs of vulnerability.
CFI counts gross FDI coming in; EVI counts the portfolio money going out. Read together they show net foreign conviction.
Vulnerability is only half the picture: read EVI against the Domestic Capital Index to see whether local money can absorb the exodus.
- · Flow ≠ stock: monthly FPI flow is volatile; the 3-month average and winsor cap stop a single month from dominating.
- · Valuation vs vulnerability: outflows can reflect stretched valuations rather than fragility; cross-read with the Valuation lens.
- · Reserve adequacy is multi-metric: import cover is one lens; short-term-debt and BoP cover are watched alongside.
- · Rupee two-way: managed depreciation differs from disorderly fall; the index flags the level, the desk note reads the cause.
Data vintage August 2026. Latest reads anchor to Business Standard / NSDL (FPI flows), RBI (rupee, reserves, balance of payments). The US real-yield hurdle is a Gravitywell estimate (US 10y TIPS). Monthly path reconstructed; reconciles to the cited sources. FPI flows are volatile and revise.
Methodology v3.2 (2026-07). Built to the OECD/JRC composite-indicator handbook and disclosed toward the IOSCO Principles for Financial Benchmarks: distance-to-reference normalisation, 3-month smoothing, a flagged contribution cap, weighted aggregation, plus a drop-one-pillar uncertainty band, an equal-weight robustness cross-check, and a data-coverage ratio (all shown above). Known limitation: the 24-month panel is too short for robust seasonal adjustment; India's March fiscal-year-end spikes are not yet removed. Series are point-in-time; published values are not silently restated.
The sudden-stop gauge, monthly.
The External Vulnerability Index tracks foreign flows, the rupee, and the external account every month.