2,913% Nifty return since 1998: CLSA on once-tiger-cub India & stock market entry point

Indian stock market benchmark Nifty has delivered a solid 2,913 per cent return in local currency terms (total return: 4,276 per cent) since CLSA's first India forum in 1998, outshining peers such Korea's Kospi, Taiwan's TWSE, Australia's S&P ASX 200 Index by a wide margin. Nifty's 1,341 per cent jump in dollar terms outdid 137-747 per cent returns delivered by peers during the same period. Despite an underperformance in the past one year, Indian stocks remain a fertile ground for positive market action, CLSA said in its fresh Bits & Pieces note. "Since the inaugural forum the Nifty Index has smashed pretty much everything in terms of performance, even outperforming the Nasdaq in USD terms," CLSA said. The foreign brokerage said Indian stock market was valued at a mere $200 billion then. Today, CLSA's coverage of just 179 Indian stocks is worth $3.1 trillion while India's market capitalisation stayed at $5.3 trillion. The tiger cub has grown up but more growth is on the way, CLSA suggested. CLSA recalled a 2003 report where it argued that India has been too often ignored by international portfolio investors. This is even by equity investors in Asian stock markets who have tended historically to focus on Japan and Hong Kong and more recently, Taiwan and Korea, it said in 2003. "This is a grievous mistake, the result in part of ignorance and in part of a lingering image of a country known for abject poverty and for an unfortunate attachment towards old fashioned British-style socialism," it said two decades ago. At that point, Indian stock market was valued at just 25 per cent of GDP while Sensex was trading only 12 per cent above 10-year lows.What's ahead? With two-thirds of large equity markets at new highs, 2025 has been a roaring global equity bull market. Driven by geopolitical, growth and trade-related headlines, the Indian market has seen record underperformance. Trade deals with the US and the EU as well as a surprise in GDP growth and improved earnings delivery provide the right set of headlines to bring back focus to the long-term India growth story, CLSA said. "With India's relative valuation versus China and EM benchmarks much more palatable and investor sentiment muted, we see ripe ground for India to start participating in the ongoing global equity bull run. We prefer rate sensitive, trade-related plays and consumption in our CLSA India portfolio," it said. CLSA said India has clearly missed the roaring global bull market of 2025 YTD, with 65 per cent of the indices from leading global country equity benchmarks making new highs. This is the broadest global bull-market breadth on record other than the pre- GFC bubble in 2007 which saw 70 per cent of country benchmarks making new highs. Clearly, 2025 has seen a roaring global bull market. "India has not participated in this global bull market and is one of a few markets which has yet to make a new high in 2025. This is a bit remarkable as India holds the record of marking new highs in 19 of the 25 years this century--the most consistent of all major country indices. A period of over 13 months is already the sixth longest wait in 30 years for a new lifetime high for the Nifty benchmark," it said. CLSA said after a record 12 months of underperformance, the relative valuation premium of India is far well below its long-term mean versus China and near three-year lows versus EM, and is offering a relatively better entry point. "This, along with muted investor confidence should be fertile ground for some positive market action even as we concede elevated absolute valuations, competition for flows from a pipeline of IPOs and capital raising along with a lack of plays on the global Al theme may limit room for a more significant rerating," it said. With limited fiscal space, CLSA expects monetary policy to remain easy. It prefers interest rate sensitive companies along with consumption in its portfolio. IT services is its contrarian view on improved headlines regarding India-US relations.