India's stocks slump through 2026 despite 7% growth, while IPOs boom

Centre · 1India's economy is growing at over 7%, but it has one of the worst performing major equity markets in 2026, according to the BBC. 1 Centre · 2The Nifty posted its eighth consecutive weekly decline in the first week of October, the longest losing streak in 25 years, according to Reuters as cited by both outlets; the BBC said the indices had inched up slightly since Monday. 1 2 Centre · 1The BBC reported that Indian investors in the Nifty have seen their wealth fall about 15% this year, against a 62% gain on South Korea's Kospi since January. 1

Centre · 2Foreign investors are the main sellers. The BBC cited Bernstein Research data showing $40bn withdrawn by foreign institutions over two years, and Gulf News, citing Reuters, said foreign investors had pulled out close to $27.8bn from Indian equities so far this year, including $2.7bn in September, when the Nifty fell 6.1%. 1 2 Centre · 2Domestic money has cushioned the fall: the BBC said mutual fund assets under management grew from about $125bn in 2016 to some $900bn, with 150 million Indians investing in stocks and mutual funds, and Gulf News said domestic institutions supplied about 33% of IPO money, up from 24% in 2021. 1 2 Centre · 1The BBC listed five causes of the slump. They are crude oil at $90-$100 a barrel with Strait of Hormuz shipping disrupted for eight months; rising global interest rates, with US bond yields above 5%; a weaker rupee and weak dollar returns; valuations that are still high relative to earnings; and the lack of an AI-led growth story, unlike South Korea and Taiwan. 1

Centre · 1Hari Shyamsunder of Franklin Templeton Asset Management India said markets can absorb crude between $70 and $90 but come under stress above $100, while Bernstein said many large Indian companies "represent a bygone economic era". 1 Centre · 1Despite the weak index, the IPO market is busy. Gulf News said 29 companies were due to list this week (eight on the mainboard, 21 on SME platforms) and that companies raised a record $25 billion in the first half of fiscal 2027, up about 75% on a year earlier, while the Nifty 50 gained only 1.3% over April-September. 2 Centre · 1September saw 34 companies raise about Rs39,340 crore ($4.1 billion) through IPOs, and almost 250 companies are looking to raise about 4.65 trillion rupees ($48 billion), according to Prime Database and Reuters as cited by Gulf News. 2

Centre · 1Analysts quoted by Gulf News said the listing rush mostly reflects a backlog of delayed offerings, with SEBI's extension of IPO approvals expiring on 30 September, rather than a rise in investor enthusiasm. They also said retail demand has become more selective, with mixed post-listing performance. 2 Centre · 1On the outlook, CareEdge said easing geopolitical tensions and relatively attractive valuations could revive foreign inflows, though trade tensions and high energy prices remain a challenge. The BBC said the real test is whether domestic investors' resilience survives a deeper correction. 1