Why India's fast growth has not lifted its stock market, per Reuters

what happened

India is growing faster than almost any large economy, yet its equity market ranks among the weakest in emerging markets. Reuters columnist Manishi Raychaudhuri argues the gap comes down to corporate earnings, which have stalled after several years of strong gains, while GDP has stayed between 7.7% and 8.6% over the last five quarters. The Sensex is up only about 8% in that stretch and has fallen roughly 15% so far this year.

Margin pressure is the core problem. Costly energy and raw materials, combined with weak demand, leave companies unable to shift their expenses onto buyers. Makers of consumer durables and everyday staples have been hit hardest, while IT services face AI-driven pressure on demand for traditional outsourcing.

Some areas are improving. Bank lending has picked up sharply, and industrials and technology hardware makers are benefiting from spending on infrastructure, energy and data centres. Consensus estimates point to 16.5% annual earnings growth in 2027 and 2028, but the author notes that forecasts have been cut before and that much depends on the conflict and commodity prices.

why it matters

For investors, the takeaway is that until profits catch up with the economy, the market may remain under pressure. A turnaround would likely require lower commodity prices and recovering margins, while a prolonged conflict would add to costs.

market impact

Indian stocks: weak corporate profits weigh on Sensex, recovery hinges on commodity prices

• ↔Indian equities (Sensex) mixed — weak profits weigh, while expected earnings growth supports

instruments