The New Indian Express ·
Why India underperforms despite strong growth
Your ability to grow your wealth depends on how India’s economy grows. Last week’s growth data showed a robust quarterly performance, and the Reserve Bank of India said it received record deposit money from non-resident Indians, who earned higher tax-free interest on their 3-to-5-year deposits. That should cheer those worried about the rupee touching record lows. Analyst reports after the June 2026 quarterly results also said most major companies posted better-than-expected profits and revenue.
Yet India is not the darling of the global stock market. Foreigners prefer markets like the US, Korea and Taiwan, and they are net sellers in Indian equities. Domestic mutual funds have no choice but to keep buying Indian shares, supporting the market like bedrock.
Other markets are also attractive. For a long time, India’s 14-15% compounded annual growth rate of profits was an attractive proposition. Indian shares outperformed markets until mid-2025, but the AI-led tech boom changed that. An analysis by brokerage Motilal Oswal shows that companies led by NVIDIA are doubling profits every year and are likely to do so even this year. Companies like Micron, Samsung, and SK Hynix are growing at twice or thrice that rate. A large chunk of foreign institutional money is flowing into these companies. Even the broader S&P 500 and the tech-heavy Nasdaq are growing profits at twice the rate of the Nifty 50 and Nifty 500. As a result, Nifty 50 and Nifty 500 have stayed flat over the past year, while large, heavyweight indices like the S&P 500 and Nasdaq 100 rose 19% and 22%. That shows expectations are higher in US indices even when trillions of dollars of assets are held in index funds linked to them.
