India’s stock market enjoyed a bull run the past five years, but several factors, chiefly rising US bond yields and a risk of slowing domestic corporate earnings, are likely to weigh on it in 2025.
Rising US bond yields amid disappointing domestic corporate earnings growth and high stock valuations in India have resulted in a recent rush of foreign fund outflows. While domestic institutional investors (DIIs) can absorb some of the sales by foreign investors, increasing primary issuances mean a glut in stock supply, which can impinge the stock markets negatively in 2025.
US bond yields have risen even as the US Federal Reserve has cut its key policy rate by 100 basis points since mid-September, to 4.25-4.5% now. This has resulted in global fund outflows from emerging markets such as India to the safety of the US dollar. (A basis point is one-hundredth of a…
