Sensex peaks at 86,000, yet India is among worst performers in a global bull run

Even other Asian markets outperformed India by a wide margin: Hong Kong jumped 33.13 per cent, Japan 31.53 per cent, and Spain 40.63 per cent on a Y-o-Y basis, reflecting broad international investor appetite for value markets and opportunities outside India.

European markets too delivered handsome returns. London advanced 17.29 per cent, Italy rose 29.75 per cent and Brazil climbed 26.58 per cent on a Y-o-Y basis. China, which has been grappling with growth anxieties and structural challenges, still managed to return 16.90 per cent, comfortably beating India. This shift in the global investment map has meant that FPIs — known for their swift risk-on and risk-off strategies — saw little incentive to remain overweight on India when other regions offered sharper, faster, and more compelling returns.

“They (FPIs) consistently withdrew money from India and deployed it in markets like South Korea, Mexico, Japan and Hong Kong where the year-long returns were dramatically higher. Even China, which typically lags, outpaced India,” the CEO of a global investment firm told The Indian Express.

In contrast, a few markets also struggled. Australia gained only 2.11 per cent, reflecting subdued investor sentiment, while Russia rose 3.82 per cent, weighed down by the continuing fallout of the Ukraine conflict and the broader geopolitical isolation of its financial system. In the US, performance was mixed: the Dow Jones Industrial Average, comprising 30 blue-chip stocks, delivered a tepid 6.25 per cent return, while the broader S&P 500 index posted a relatively stronger 13.54 per cent gain.

Against this backdrop, India’s muted returns have inevitably led FPIs to pare exposure. According to NSDL data, they have withdrawn Rs 1.48 lakh crore from Indian equities since January 2025. This sizeable outflow has taken place despite India’s strong macro fundamentals, including stable inflation, a supportive interest-rate environment and resilient domestic consumption. The Reserve Bank of India has projected 6.5 per cent GDP growth for 2025–26, and the country posted a robust 8.2 per cent GDP expansion in the September quarter, signalling strong momentum.
The Sensex which touched a low of 71,425 in April 2025, had touched an intra-day all-time peak of 86,055.86 on November 27, 2025 as crude oil prices showed an easing trend, global factors turned conducive for the markets and the US Fed hinted at a rate cut.

The paradox is striking: India’s economy remains one of the world’s fastest growing, yet its stock market has underperformed sharply. Analysts say the divergence underscores a broader trend — FPIs rotating aggressively into markets offering better value, undervalued opportunities, and tactical gains, while relying on India only for selective allocations during periods of global stability. Meanwhile, domestic institutional investors and retail savers have provided the backbone that kept Indian indices steady and eventually pushed them to new highs, even as foreign money departed.

As the global environment shifts again, driven by interest rate expectations, geopolitical developments and trade realignments, the key question is whether India can regain its relative performance edge. For now, the numbers make one thing clear: the world’s best returns over the last year were found elsewhere, not in India.