After years of strong performance, the Indian stock market has struggled in 2025, with the Sensex underperforming not only major global indices but also regional peers like Pakistan. While the Sensex gained around 8.8% this year, Pakistan’s KSE 100 index surged over 51%, making it one of the world’s best-performing markets.
Global Comparisons
Other international markets outpaced India as well. South Korea’s KOSPI topped global charts with a 68% gain, followed by Japan’s Nikkei 225 (29%), Hong Kong’s Hang Seng (28%), China’s Shanghai Composite (16%), the US S&P 500 (15%), and the UK’s FTSE 100 (21%).
Factors Behind India’s Underperformance
The lag is mainly attributed to sentiment and foreign portfolio investor (FPI) caution. Net FII outflows from India reached ₹156,852 crore over the last year. Contributing factors include a weakening rupee, slowing earnings growth, and high US tariffs on Indian exports. Despite these headwinds, domestic macroeconomic conditions have remained largely positive, with GDP growth of 8.2%, lower crude prices, RBI rate cuts, and strong festive demand.
Outlook
India’s stock market could regain momentum once clarity emerges on India-US trade negotiations and foreign inflows return. While 2025 has been challenging, supportive domestic policies and resilient investor participation provide a potential foundation for recovery in 2026.
Global Market Returns in 2025
| Country | Return (%) | Index |
|---|---|---|
| India | 8.84 | Sensex |
| Pakistan | 51.96 | KSE 100 |
| China | 16.2 | Shanghai Composite |
| USA | 14.77 | S&P 500 |
| South Korea | 68.35 | KOSPI |
| Hong Kong | 28.46 | Hang Seng |
| Japan | 28.97 | Nikkei 225 |
| UK | 21.31 | FTSE 100 |
| Canada | 28.79 | S&P/TSX |
The underperformance underscores the importance of foreign inflows and trade clarity in driving India’s market growth.
