Indian stock market lags as Korea, China rally up to 32% in 6 months; catch up ahead?
Against a 32 per cent surge in Korean Kospi, 19 per cent jump in Taiwan's Taiex and 14 per cent rise in mainland China's Shanghai Composite in the past six months, Nifty and Sensex are up a mere 5-6 per cent.
- Sep 24, 2025,
- Updated Sep 24, 2025 3:15 PM IST
Indian stocks posted the weakest six-month returns among Asian peers, as stretched valuations, slowing earnings growth and trade war concerns — including 50 per cent US tariffs on Indian imports — weighed on foreign inflows. Retail participation offered some cushion, but the benchmark indices still trade about 3 per cent below year-ago levels.
Data showed foreign inflows in Asia ex-Japan stood at a solid $18 billion in 2025 so far. Foreign outflows for India this year stood at Rs 1,39,423 crore or roughly $15.71 billon. In fact, other than Taiwan, all the other markets have seen foreign outflows. Against 32 per cent surge in Korean Kospi, 19 per cent jump in Taiwan's Taiex and 14 per cent rise in mainland China's Shanghai Composite in the past six months, domestic indices Nifty and Sensex are up a mere 5-6 per cent during the said period. Japan's Nikkei and Hong Kong's Hang Seng rose 22 per cent and 11 per cent, respectively, during the same period.
Stock analysts tracking global markets, however, believe Korea and Taiwan are crowded trades now, even as they see more upside in China and Hong Kong shares.
HSBC said a key reason for India's underperformance is a slowdown in earnings while valuations remained elevated. Consumption and investment trends are weak and in response the administration is focused on boosting consumption and the central bank is easing, it said.
The foreign brokerage said together with moderate inflation, this can support domestic demand and earnings.
"Be this as it may, there are no signs of any recovery in growth just yet. While growth can help boost consumption in the near term, for a more sustainable pick-up, wages and private capex will have to improve. Another issue that hangs over Indian earnings is the 50 per cent US tariff on imports from India. Indeed, India faces some of the highest US tariff rates in the world," HSBC said.
HSBC said most listed equities are domestic in nature and less than 4 per cent of sales for all BSE500 companies come via exports of goods to the US. When it comes to earnings growth, the direct impact from tariffs is muted.
"The growth recovery is likely to be gradual, but we think the risks are reflected in valuations. 2025 consensus forecasts for earnings growth have come down – they are now at 12 per cent and we expect this to drop to 8-9 per cent. 2026 estimates of 15 per cent might appear high and much will depend on how effective the policies will be in reviving growth," it said.
Nifty, Sensex targets Emkay Global said valuations are elevated, with the market running ahead of expected earnings upgrades. It, however, remained optimistic about the market and maintained its Nifty target at 28,000.
MOFSL said Nifty is down 8 per cent YoY against 16 per cent rise in MSCI EM and 15 per cent in S&P500. It feels a rebound is likely in the coming quarters due to reasonable valuations and easing earnings pressures.
On Sensex, HSBC set end-2025 target of 85,130 and end-2026 target of 94,000.
Indian stocks posted the weakest six-month returns among Asian peers, as stretched valuations, slowing earnings growth and trade war concerns — including 50 per cent US tariffs on Indian imports — weighed on foreign inflows. Retail participation offered some cushion, but the benchmark indices still trade about 3 per cent below year-ago levels.
Data showed foreign inflows in Asia ex-Japan stood at a solid $18 billion in 2025 so far. Foreign outflows for India this year stood at Rs 1,39,423 crore or roughly $15.71 billon. In fact, other than Taiwan, all the other markets have seen foreign outflows. Against 32 per cent surge in Korean Kospi, 19 per cent jump in Taiwan's Taiex and 14 per cent rise in mainland China's Shanghai Composite in the past six months, domestic indices Nifty and Sensex are up a mere 5-6 per cent during the said period. Japan's Nikkei and Hong Kong's Hang Seng rose 22 per cent and 11 per cent, respectively, during the same period.
Stock analysts tracking global markets, however, believe Korea and Taiwan are crowded trades now, even as they see more upside in China and Hong Kong shares.
HSBC said a key reason for India's underperformance is a slowdown in earnings while valuations remained elevated. Consumption and investment trends are weak and in response the administration is focused on boosting consumption and the central bank is easing, it said.
The foreign brokerage said together with moderate inflation, this can support domestic demand and earnings.
"Be this as it may, there are no signs of any recovery in growth just yet. While growth can help boost consumption in the near term, for a more sustainable pick-up, wages and private capex will have to improve. Another issue that hangs over Indian earnings is the 50 per cent US tariff on imports from India. Indeed, India faces some of the highest US tariff rates in the world," HSBC said.
HSBC said most listed equities are domestic in nature and less than 4 per cent of sales for all BSE500 companies come via exports of goods to the US. When it comes to earnings growth, the direct impact from tariffs is muted.
"The growth recovery is likely to be gradual, but we think the risks are reflected in valuations. 2025 consensus forecasts for earnings growth have come down – they are now at 12 per cent and we expect this to drop to 8-9 per cent. 2026 estimates of 15 per cent might appear high and much will depend on how effective the policies will be in reviving growth," it said.
Nifty, Sensex targets Emkay Global said valuations are elevated, with the market running ahead of expected earnings upgrades. It, however, remained optimistic about the market and maintained its Nifty target at 28,000.
MOFSL said Nifty is down 8 per cent YoY against 16 per cent rise in MSCI EM and 15 per cent in S&P500. It feels a rebound is likely in the coming quarters due to reasonable valuations and easing earnings pressures.
On Sensex, HSBC set end-2025 target of 85,130 and end-2026 target of 94,000.