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India's Stock Market Slumps Despite Strong Economic Growth
Confirmed
In Short: Despite the strong economic growth, the stock market's performance is concerning for the 150 million Indians who have invested in stocks and mutual funds.
India's economy is growing at an impressive rate of over 7%, despite global challenges such as energy shocks, rising interest rates, and tariff uncertainties. However, the country's stock market is one of the worst performers globally in 2026.
According to the BBC, foreign investors' net investment in Indian markets over the past decade is nearly zero, indicating a lack of confidence in the market.
Hari Shyamsunder, a fund manager with Franklin Templeton Asset Management India, noted that high crude oil prices above $100 a barrel put stress on macroeconomic variables like inflation and company earnings.
The correction in Indian stocks has intensified recently, with large domestic institutional and retail investors supporting the market through mutual funds. Domestic assets under management of mutual funds have grown from about $125 billion in 2016 to $900 billion this year.
Despite the strong economic growth, the stock market's performance is concerning for the 150 million Indians who have invested in stocks and mutual funds. Many large companies in India represent a bygone economic era, according to Bernstein Research.
The Indian Express reported that despite higher freight rates and logistical disruptions, India's exports grew by 15% in the April-June quarter, contributing to the 7.8% GDP growth.
However, the export growth picture masks an uneven performance across sectors, with some companies facing challenges in maintaining profitability due to rising input prices.
RBI Governor Sanjay Malhotra highlighted the positive trajectory of the Indian economy, projecting a real GDP growth of 7.4% for the fiscal year 2025-26, attributing this growth to robust private consumption and fixed investment.
The Next-Generation Goods and Services Tax (GST) aims to simplify compliance and reduce rates, fostering an environment where businesses can grow regardless of their size or location.
Despite these efforts, the market remains volatile, with the 10-year Treasury yield climbing to 5.163% intraday, reinforcing concerns about persistently high borrowing costs undermining stock valuations and economic growth.
The 10-year Treasury yield increased by roughly 5 to 8 basis points, extending a bond-market decline that has pushed long-term U.S. bond yields higher.
Energy-market volatility and discussions over a possible phased reopening of the Strait of Hormuz have helped stabilize equities late in the session, even as oil prices rose sharply.
Background
India's government aims to enhance economic growth through the implementation of the Next-Generation Goods and Services Tax (GST), designed to simplify compliance and reduce rates.
Finance Minister Nirmala Sitharaman has outlined plans to advance India's economic growth through the Next-Generation Goods and Services Tax (GST) system.
What's confirmed
- India's economy is growing at an impressive rate of over 7%, despite global challenges such as energy shocks, rising interest rates, and tariff uncertainties. However, the country's stock market is one of the worst performers globally in 2026.
- According to the BBC, foreign investors' net investment in Indian markets over the past decade is nearly zero, indicating a lack of confidence in the market.
- Hari Shyamsunder, a fund manager with Franklin Templeton Asset Management India, noted that high crude oil prices above $100 a barrel put stress on macroeconomic variables like inflation and company earnings.
- The correction in Indian stocks has intensified recently, with large domestic institutional and retail investors supporting the market through mutual funds. Domestic assets under management of mutual funds have grown from about $125 billion in 2016 to $900 billion this year.
- Despite the strong economic growth, the stock market's performance is concerning for the 150 million Indians who have invested in stocks and mutual funds. Many large companies in India represent a bygone economic era, according to Bernstein Research.
- The Indian Express reported that despite higher freight rates and logistical disruptions, India's exports grew by 15% in the April-June quarter, contributing to the 7.8% GDP growth.
- However, the export growth picture masks an uneven performance across sectors, with some companies facing challenges in maintaining profitability due to rising input prices.
- RBI Governor Sanjay Malhotra highlighted the positive trajectory of the Indian economy, projecting a real GDP growth of 7.4% for the fiscal year 2025-26, attributing this growth to robust private consumption and fixed investment.
- The Next-Generation Goods and Services Tax (GST) aims to simplify compliance and reduce rates, fostering an environment where businesses can grow regardless of their size or location.
- Despite these efforts, the market remains volatile, with the 10-year Treasury yield climbing to 5.163% intraday, reinforcing concerns about persistently high borrowing costs undermining stock valuations and economic growth.
- The 10-year Treasury yield increased by roughly 5 to 8 basis points, extending a bond-market decline that has pushed long-term U.S. bond yields higher.
- Energy-market volatility and discussions over a possible phased reopening of the Strait of Hormuz have helped stabilize equities late in the session, even as oil prices rose sharply.
What's still developing
- This makes the recent fall in the markets more worrying - since households, already struggling from a weak job market, high inflation and faltering consumption, are now seeing their equity savings take a beating too.
- Here are five reasons India's booming economy isn't lifting its stock market.
- According to the assessment, these initiatives could result in benefits equivalent to 2.8% of global GDP by 2035, escalating to 11.4% by 2100, far surpassing the economic impact of fossil fuel subsidies.
- It calls for integrated planning across climate, air-quality, health, and economic sectors, alongside stronger institutional frameworks and better alignment of financial resources.
- A groundbreaking report released by the United Nations Environment Programme (UNEP) and the Climate and Clean Air Coalition (CCAC) reveals that coordinated efforts to tackle air pollution and climate change could generate $15 in economic benefits for every dollar spent.
- The assessment, which coincides with the International Day of Clean Air for blue skies, emphasizes the potential of 25 proven measures to enhance public health and drive economic growth across the globe.
- Despite the promising projections, the report identifies challenges such as fragmented decision-making and limited enforcement capacity, which could delay the full benefits by up to eight years.
- Highlighting the “brisk” growth in India’s non-oil and non-gold exports, which form the core of its exports, Chief Economic Adviser (CEA) V Anantha Nageswaran said exports are benefiting from free trade agreements (FTAs), export diversification and “possibly rising competitiveness”.
- “There has been a 10-fold surge in freight rates in key markets including Iran, Iraq, the US and the EU. Payment has also become a problem in the region,” Kanoria said.
- Healthy export figures amid two ongoing wars also supported the 7.8% year-on-year growth in gross domestic product (GDP) during the April-June quarter.
- Trump has urged Republicans to “pretend” he is on the ballot, arguing that voters should view the midterms as a referendum on his administration and economic record.
- His party is trying to persuade voters that investment, manufacturing and economic growth under Trump outweigh the pain of higher prices stemming from the unpopular US-Israeli war on Iran.