New Delhi, June 13
The Indian stock market has delivered stellar performance over the last five years, generating 18 per cent annualised returns in US dollar terms -- the highest among global markets, a new report said on Friday.
India’s long-term outperformance stands out as it surpasses the 12 per cent returns delivered by world and developed markets and is more than four times higher than those of other emerging markets, according to data compiled by the Bandhan Mutual Fund.
In sharp contrast, China’s markets declined 2 per cent in May 2025, making it one of the few major economies to end the month in the red.
Small-cap stocks have played a leading role in India’s growth story, outperforming across the board -- whether over the last three months, five years, or since the pandemic lows of March 2020.
Mid-caps followed close behind, while large-caps trailed, highlighting the rising risk appetite and growing domestic investor participation in broader segments of the market, the report said.
Between March and May 2025, Indian equities surged 16 per cent, far ahead of the 5 per cent gains in emerging markets and just 2 per cent in developed and world markets.
The report noted that India continues to attract investor confidence despite global uncertainties and headwinds, as per the report.
Industrials, capital goods, and telecom sectors were top performers in May, supported by strong earnings and policy tailwinds.
In contrast, defensive sectors such as FMCG, healthcare, and IT posted modest gains. Utilities remained flat while metal stocks declined slightly.
On the macroeconomic front, India’s Services PMI rose in May, signalling a recovery in the services sector.
However, the Manufacturing PMI dipped slightly, pointing to a marginal slowdown in industrial output.
A weaker US dollar, easing domestic interest rates, and earnings that largely met expectations also contributed to strong market sentiment.
India’s fiscal deficit target for FY25 was successfully met at 4.8 per cent of GDP, with a further improvement projected at 4.4 per cent for FY26.
Inflation trends are encouraging too -- food inflation has declined for six consecutive months, though core inflation ticked up marginally.
— IANS
Reader Comments
This is why I keep telling my NRI friends to invest in India! While China struggles, our markets are creating wealth for retail investors like never before. The small-cap boom shows how democratized investing has become - no longer just for big players. 🇮🇳
Impressive numbers but we shouldn't get overconfident. The manufacturing PMI dip is concerning - we need more balanced growth across sectors. Still, 18% returns are no joke! My SIPs have doubled in 5 years 😊
China's loss is India's gain! Global investors finally recognizing our economic potential. The capital goods sector performing well shows Make in India is working. But government should focus more on manufacturing revival now.
As a new investor, these numbers excite me but also scare me a bit. Isn't 18% unsustainable? Experts say markets can correct anytime. I've started with index funds instead of chasing small-cap returns. Better safe than sorry!
The real story here is domestic investor participation. Earlier markets would crash on FII selling, now retail investors are holding strong. This is financial inclusion in action! More Indians taking charge of their wealth creation journey.
Good news but how does this help common people? Stock market highs don't reduce vegetable prices. I hope this wealth creation reaches middle class through better jobs and salaries, not just paper profits for those who can afford to invest.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.