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Mint
3 days ago
- Business
- Mint
Indian stock market gives 18% returns in 5 years, beats China, other global market peers; small-cap stocks outperform
Indian stock market has emerged as the top-performing globally, significantly outpacing both developed and emerging market peers over short and long-term horizons, according to the June 2025 Monthly Market Outlook by Bandhan Mutual Fund. For the three-month period ending May 2025, Indian equities delivered an impressive 16% return, sharply outperforming the 5% gain in emerging markets and the modest 2% rise in world and developed markets. The data highlights India's resilience and continued investor interest despite global uncertainties. Over a five-year horizon, Indian stock market has been the best-performing market in US dollar terms, delivering 18% annualised returns. This surpasses the 12% returns of world and developed markets and is over four times higher than returns from emerging markets, the fund house noted. In contrast, China saw a 2% decline in May 2025, standing out negatively among major global markets, most of which ended the month in green. Index/Returns in USD 3 Months 5-Year India 16% 18% World 2% 12% Developed Markets 2% 12% Emerging Markets 5% 4% From a market capitalisation lens, small-cap stocks have been the top performers over the last three months, five years, and since the pandemic lows of March 2020. Mid-caps came in second, followed by large-caps, highlighting the strong risk appetite and domestic participation in broader segments of the market. Time Period/ Returns 3 Months 5 Years Large-caps 13% 22% Mid-caps 17% 32% Small-caps 21% 36% Sector-wise, industrials, capital goods, and telecom led the rally in May with double-digit returns, driven by strong earnings and policy tailwinds. In contrast, FMCG, healthcare and IT, traditionally seen as defensive sectors, posted the lowest positive returns, while utilities were flat and metals saw marginal declines. India's Services PMI rose in May, pointing to a recovery in the services sector. However, the Manufacturing PMI slipped, reflecting some slowdown in industrial output. The fund house noted that a weakening US dollar, falling domestic interest rates, and earnings largely in line with expectations contributed to the robust market performance. 'The domestic economy seems to be turning around and is much better placed than the global economy,' said Manish Gunwani, Head Equities, Bandhan AMC. He also cautioned about near-term volatility due to global trade developments. 'As the US continues to sign trade deals, the front-loading of global trade has supported activity, but the introduction of tariffs could disrupt flows.' On the macroeconomic front, India's FY25 fiscal deficit met the revised target of 4.8% of GDP, with FY26 budgeted at 4.4%, indicating continued fiscal discipline. Inflation momentum appears benign, with food CPI showing negative growth for the sixth consecutive month, while core inflation edged higher. The India Meteorological Department's forecast of an above-normal monsoon is expected to support food supply and keep inflationary pressures in check. Meanwhile, the RBI's surprise 50 basis point rate cut and a 100 basis point CRR reduction signal a strong pro-growth bias, aimed at ensuring swift monetary transmission. 'This proactive stance is intended to support economic recovery and fuel credit growth,' said Suyash Choudhary, Head – Fixed Income, Bandhan AMC. As of May 16, 2025, bank credit grew 9.8% YoY, while deposits increased 10%, underscoring improving liquidity and confidence in the financial system. While India appears well-placed relative to global peers, Gunwani expects market volatility to persist in the coming quarters, driven by external uncertainties such as global trade realignments and geopolitical developments. However, strong domestic macro fundamentals, a benign inflation outlook, and supportive fiscal and monetary policy provide a solid cushion for Indian equities. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisio
Economic Times
09-05-2025
- Business
- Economic Times
No froth in market; largecaps may offer short-term value: Manish Gunwani
Manish Gunwani, Head-Equity, Bandhan AMC, says equity markets, with a 6% real return over the past decade, don't currently signal bubble concerns. While large caps may offer short-term value, focusing on themes and bottom-up investing presents sufficient risk-reward. Anticipated foreign capital inflow into India over three to five years, influenced by dollar trends, should sustain market attractiveness. Earnings have been okay and macros have improved on the margin, but markets have been great, which means the price action has been more exciting than the change in the economy. At this juncture, are markets pricing in a lot of good news or is this something which markets will be able to digest and sustain? Manish Gunwani: There is a feeling that markets are frothy, but that is probably because of mid and smallcap performance over the last three years. Objectively, if you see long-term data, the best correlation of market levels is not to GDP growth but to inflation. The 10-year real return on Nifty 500 is about 6%, which is where it should be theoretically because empirically, every market tends to converge at about 5-7% real return in equities when you see very long-term data. Obviously, this does not work on a one- or two-year kind of time frame. I do not think this is a market to be excessively worried about. There is a bit of narrative about this being a bubble. I do not know, means the data does not seem to suggest that in 10 years, the equity markets have returned about 6% real return, it is not typically a level at which you should worry too much about market level. Now, you could say largecaps are cheaper and all that, yes, from a one-year perspective that may work. But it is a market where if we focus on just themes and bottom-up investing, there is enough risk-reward available. I would like to draw your attention to the whole FII aspect. Suddenly, they are back and when FIIs come back, they tend to stay for long. Can we be reasonably sure that in the next few months, liquidity will not be a problem? FIIs are back, promoters are not selling, IPOs have dried up. So, at least on the liquidity front you can be more constructive. Manish Gunwani: As I said, ultimately you are part of the world. Now, if you have a country where your biggest import, energy, is structurally looking weak in terms of prices because of EVs and renewables and if you have a country where the biggest export which is services seem to be very resilient. So, even when listed IT services companies have slowed down, if you see our net services export has held up remarkably well, if someone is looking at long-term asset allocation globally, it is difficult to believe that you can be negative on Indian rupee or Indian assets, that does not mean every three months we will see positive foreign flows. But if you take a three-five-year view, I would think that foreign capital should come meaningfully into India. Maybe fixed income and FDI are more attractive because we tend to be expensive on listed equities, but we will not see any big outflows in the sense that yes, we saw outflows but ultimately if the market is attractive, foreign inflows will be healthy and the near-term, not everything but a big factor is the dollar. If the dollar index went from 110 to 99, I do not think it is very surprising to see foreign flows turning positive.
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Business Standard
28-04-2025
- Business
- Business Standard
Room for RBI to respond to global growth drag: Bandhan AMC's Choudhary
The weakening of the dollar reflects some unwinding of the so-called 'US exceptionalism' theme, which had attracted disproportionately large allocations to dollar assets over the years Abhishek Kumar Listen to This Article While the growth-inflation trade-off emanating from the tariff impacts is somewhat tricky for the US, it is relatively clearer for India as inflation is under control, according to SUYASH CHOUDHARY, head-fixed income, Bandhan AMC. In an email interview with Abhishek Kumar, Choudhary says expectations of resilient economic growth and fiscal discipline make Indian government bonds appealing. Edited excerpts: India's debt market has largely remained insulated from global trade tensions. What are the reasons and can it sustain? The weakening of the dollar reflects some unwinding of the so-called 'US exceptionalism' theme, which had attracted disproportionately large allocations to dollar assets
