Global markets add $27 trillion, India sees modest growth
What's the story
The global market capitalization witnessed a massive surge of 22.1% ($27.4 trillion) in 2025, according to a report by Motilal Oswal. In contrast, India's market cap only saw a marginal increase of 2.8% year-on-year during the same period. The report highlights that South Korea topped the list with an impressive 77% jump in its market capitalization, taking it to $2.7 trillion.
Ratio fluctuations
India's market cap-to-GDP ratio shows volatility
The report also notes the volatility of India's market cap-to-GDP ratio. It plummeted to 57% of FY20 GDP in March 2020 from 80% in FY19, before sharply rebounding to 132% in FY24 and 126% in FY25. As of now, it stands at a healthy 133% of FY26E GDP, up by a significant margin compared to its long-term average of 87%.
Market comparison
Indian stock market underperforms Asian peers
The Indian stock market lagged behind its key Asian counterparts, many of which saw a surge between 16% and 70%. Notably, Pakistan's KSE 100 index jumped an astonishing 51.20% in 2025. This outperformance was attributed to the country's smaller market size, IMF support, and domestic rate cuts that improved liquidity conditions.
Global performance
Other global markets outperform Indian stock market
Other global markets also outperformed the Indian stock market. South Korea's KOSPI led with a whopping 75.63% surge, while China's, Hong Kong's and Japan's markets delivered returns two to three times higher than India's Sensex. The US market also posted strong gains with the broader S&P 500 index advancing by 17.25%.
Future outlook
Indian markets poised for recovery in 2026
Motilal Oswal believes that Indian markets are well-positioned to recover from their CY25 underperformance. This optimism is based on improved earnings prospects, supportive domestic macroeconomic conditions, and a better geopolitical environment. Axis Securities shares a similar sentiment, expecting key headwinds such as weak corporate earnings and stretched valuations to ease next year.