Indian stock market gives 18% returns in five years, beats China, other global market peers; small-cap stocks outperform
- IBEF
- June 16, 2025
India has emerged as the world’s best-performing equity market, significantly outpacing developed and emerging peers over both short- and long-term periods, according to Bandhan Mutual Fund’s June 2025 Monthly Market Outlook. For the three months ending May 2025, Indian equities posted a 16% return, compared to a 5% rise in emerging markets and 2% in developed markets. Over a five-year horizon, Indian markets delivered 18% annualised returns in United States (US) dollar terms, well above the 12% returns from global and developed markets and more than four times the gains from emerging markets. In contrast, China posted a 2% decline in May, underlining India’s relative strength.
Segment-wise, small-cap stocks have led returns across timeframes—posting gains of 36% over five years—followed by mid-caps at 32% and large-caps at 22%. Sectorally, industrials, capital goods, and telecom outperformed in May, while defensive sectors like Fast-Moving Consumer Goods (FMCG), healthcare, and Information Technology (IT) posted muted gains. On the macro front, India’s fiscal deficit for FY25 met the revised target of 4.8% of Gross Domestic Product (GDP), with FY26 pegged at 4.4%, signalling continued fiscal prudence. A positive monsoon forecast is expected to ease food inflation pressures, with the food consumer price index (CPI) declining for the sixth straight month. The Reserve Bank of India’s surprise 50 basis point repo rate cut and a 100 basis point Cash Reserve Ratio (CRR) reduction also reflect a strong pro-growth stance. As of May 16, 2025, bank credit grew 9.8% YoY, and deposits rose 10%, indicating rising financial activity. While global volatility may persist, strong domestic fundamentals and supportive policy measures are expected to underpin Indian market performance in the near term.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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