Nifty Among 2025’s Worst-Performing Markets, Joins Thailand and Philippines

Indian equity markets, once a beacon of growth, have had a turbulent start to 2025. The Nifty50 Index, a benchmark tracking the country’s top 50 companies, has slumped by 6% in US dollar terms since the beginning of the year. This sharp decline places Nifty among the worst-performing emerging market indices, trailing only Thailand’s SET Index and the Philippines’ PSEi Index.

Comparing Global Market Performance

While the Nifty 50 has struggled, the Thai and Philippine stock markets have seen even steeper declines. Thailand’s benchmark index has plunged nearly 10%, and the Philippines’ PSEi Index has dropped 6.7%. Indonesia’s Jakarta Composite has also seen a 5.7% fall during the same period.

In stark contrast, Hong Kong’s Hang Seng Index and South Korea’s Kospi have led gains in Asia, rising by 16.4% and 14%, respectively. Despite a 25% surge in Chinese stocks, the Shanghai Composite still trades at a valuation of 12.3 times its one-year forward earnings, while the Kospi is valued at 9.3 times. Comparatively, the Nifty 50 remains more expensive at 18.7 times forward earnings.

Declining Investor Confidence in Indian Markets

According to reports, investor sentiment towards Indian equities has waned significantly. A recent survey indicated that only 19% of fund managers hold a positive outlook on the Indian market over the next 12 months, a sharp decline from 10% in January.

Allocations to Indian equities have now collapsed to a 2-year low, as investors favour Japan and Taiwan. Japan remains the top choice among global investors, bolstered by record-high economic optimism, while Taiwan follows at a distant second.

Foreign Investors Exit Amid Valuation and Currency Concerns

Foreign portfolio investors (FPIs) have continued their selling spree, offloading $400 million worth of Indian shares on February 21 alone. Since October last year, FPIs have collectively sold $24 billion worth of Indian stocks on a net basis.

The exodus of foreign investors was initially triggered by concerns over India’s high valuations and slowing economic growth. However, rising US bond yields and a depreciating rupee have further intensified the sell-off. With US Treasury yields hovering around 4.4% and the Indian rupee weakening by 3.2% against the US dollar over the past six months, Indian equities have become less attractive to global investors.

Conclusion 

While Indian markets grapple with heightened volatility, the broader trends suggest a shift in global investor preference towards markets perceived as more stable and offering better valuations. Whether the Nifty 50 can recover in the coming months will depend on macroeconomic factors, foreign fund flows, and domestic market resilience.

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