India Delivers Best Stock Market Returns Globally, Far Ahead Of China, EMs

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.

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.

Source : ABPLIVE AI

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.

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)