Indian Markets Set to Deliver Positive Returns for 9th Consecutive Year, Outperforming US Equities
Indian markets are set to deliver positive returns for the 9th consecutive year in 2024, driven by strong economic growth and corporate earnings, outperforming US equities and offering long-term investment potential.
New Delhi: India’s equity markets are on track to deliver positive returns for the ninth consecutive year, driven by strong fundamentals, robust economic growth, and corporate earnings. In 2024, despite volatility in the second half, Indian markets have shown resilience, continuing to outperform global indices, including the US stock markets.
According to a report by Standard Chartered Bank, 2024 has been marked by two distinct phases for Indian equities and bonds.
The first half of the year saw strong growth, fueled by positive economic activity and impressive corporate earnings. However, the second half experienced increased volatility due to market consolidation, although the overall performance remained positive.
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Indian Markets Continue Strong Performance
Despite challenges in the latter half of the year, Indian benchmark indices such as the Nifty 50 and Sensex have posted solid gains. The Nifty 50 index rose by 9.21% in 2024, while the Sensex increased by 8.62%, continuing the trend of positive returns that have characterized the Indian stock market for nearly a decade.
The ongoing economic growth and favorable business environment have supported investor confidence, contributing to the outperformance of Indian markets. This strong performance highlights India’s resilience and long-term investment potential.
Indian Markets Outperform US Equities Over the Last 35 Years
A report by Motilal Oswal emphasizes that Indian equities have significantly outperformed US markets over the past 35 years. Since 1990, investments in Indian equities have grown by nearly 95 times. To illustrate this, if an investor had put Rs 100 in the Indian stock markets in 1990, it would have grown to Rs 9,500 by November 2024. In comparison, the same Rs 100 invested in US stock markets would have grown to Rs 8,400 during the same period.
Additionally, gold investments during this time period yielded returns 32 times the original investment, further demonstrating the strong performance of Indian markets compared to other asset classes.
Outlook for Earnings Growth and Market Performance
Looking ahead, the outlook for Indian markets remains positive, with expectations for continued growth. According to Motilal Oswal Wealth Management, while the first half of FY25 saw a subdued earnings performance, a strong recovery is anticipated in the second half. Factors such as increased rural spending, a buoyant wedding season, and a rise in government spending are expected to drive earnings growth.
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The report also forecasts a 16% compound annual growth rate (CAGR) in earnings over the FY25-27E period, further reinforcing the optimism around India’s long-term economic prospects. This optimistic outlook, coupled with the recent market correction and moderation in valuations, presents a unique opportunity for investors to explore selective, bottom-up stock ideas.
Long-Term Optimism for Indian Equity Markets
Despite short-term volatility, experts remain optimistic about the long-term trend of Indian markets. The strength of corporate India’s balance sheets, coupled with strong growth prospects, positions India as a favorable destination for investment. The potential for profitable growth and market stability is expected to continue, making Indian equities an attractive option for both domestic and global investors.
India’s growth story continues to evolve, and its equity markets are poised to remain one of the top performers in the global arena. With a growing economy, robust corporate earnings, and an increasingly favorable business climate, Indian markets are well-positioned for sustained success.
