Five reasons India's stock market is sinking even when its economy is growing

[Yasser76]

Five reasons India's stock market is sinking even when its economy is growing

Nifty: Five reasons India's markets are sinking even when its economy is growing

The world's fastest growing major economy has one of the worst performing major equity markets in 2026.

www.bbc.co.uk

 

[Master Chief]

1 main reason - Much harder to fake the fundamentals of a publicly listed business venture than it is to fake national GDP.

 

[Mighty_Dragon_Strike]

Stock market returns are not indicative of the ground realities faced by the economy.


more than economy, India has (to the best of my knowledge) more than 600 billion dollars in reserves?!!


that to me, is a proof, Indian economy is doing just enough to be better than ours and thats the bottom line for us, as a Pakistani..!

 

[Vikramaditya1]

1 main reason - Much harder to fake the fundamentals of a publicly listed business venture than it is to fake national GDP.

That's a stupid argument. Stock markets are responding to supply chain disruption due to middle East conflict, bond crisis making dollar more attractive forcing foreign investors to sell and move their assets to dollars and poor corporate earnings with overvaluation of stocks.

GDP don't always reflect the stock market.

 

[Master Chief]

bond crisis making dollar more attractive forcing foreign investors to sell and move their

Why is anyone "forced" to sell their nifty stocks? Bond markets are more attractive than Infian stocks for a reason. Nobody forces anyone to sell stocks and buy US bonds.

 

[Master Chief]

That's a stupid argument.

Sadly, this is not proof of the absence of manipulation of Indian GDP data.

 

[samsite84]

Sadly, this is not proof of the absence of manipulation of Indian GDP data.

Now you're pulling things from your bottom just like your lil bro @Yasser76 .

You have no substantive data to prove that a) Indian GDP is manipulated and that b) The manipulation caused decline in stock prices.

Moreover, if we were to test your hypothesis that data is manipulated, why haven't global institutions pulled all the money back / wound-up investments? The article clearly states the reasons and each one is valid but I am sure you didn't bother to read that - objective analysis doesn't look like your strong suite.

 

[retaxis]

GDP don't always reflect the stock market.

That is true for a socialist country like China where stocks were more a gambling thing then anything else

Not so sure that applies to India

 

[Master Chief]

Now you're pulling things from your bottom just like your lil bro @Yasser76 .

You have no substantive data to prove that a) Indian GDP is manipulated and that b) The manipulation caused decline in stock prices.

Moreover, if we were to test your hypothesis that data is manipulated, why haven't global institutions pulled all the money back / wound-up investments? The article clearly states the reasons and each one is valid but I am sure you didn't bother to read that - objective analysis doesn't look like your strong suite.

Your argument is with your countrymen, not with me.

India's GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications

www.hks.harvard.edu

India's 20 years of GDP misestimation: New evidence

New evidence suggests that India misestimated its annual economic growth rate during the past two decades. It appears that the Indian economy did not grow at a stable rate over the past two decades, as was earlier estimated, but rather boomed during the early 2000s, then decelerated after the...

www.piie.com

 

[Master Chief]

You have no substantive data to prove that a) Indian GDP is manipulated and that b) The manipulation caused decline in stock prices.

Lol.
I never said one led to the other.

My original assertion was that one can be manipulated easily while the other is very difficult to manipulated as it relies on actual fundamental business data.

What was that you were just saying about me not reading stuff??

 

[samsite84]

Lol.
I never said one led to the other.

My original assertion was that one can be manipulated easily while the other is very difficult to manipulated as it relies on actual fundamental business data.

What was that you were just saying about me not reading stuff??

Dude - are you serious? Stock markets are subject to massive swings and manipulations as they are for investors are doing price discovery (demand-supply and are not purely fundamental based).

There is a popular saying - that sooner or later the market will return to fundamentals but that time can be so long that you loose your investments in the interim.

The fundamentals theory is not incorrect but only holds in long-term. Even then long-term is hard to define and can be anywhere from 3-5 years (10 years is a good marker)

Now if you'd like, I can start listing all the CFA articles, valuation guru (Aswath Damodarans) books etc. etc. but I don't think the level of discussion here, requires it. A google search from your end will suffice - if you're in doubt.

 

[samsite84]

Your argument is with your countrymen, not with me.

India's GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications

www.hks.harvard.edu

India's 20 years of GDP misestimation: New evidence

New evidence suggests that India misestimated its annual economic growth rate during the past two decades. It appears that the Indian economy did not grow at a stable rate over the past two decades, as was earlier estimated, but rather boomed during the early 2000s, then decelerated after the...

www.piie.com

You're confusing mis-estimation and manipulation - massive difference. Here are a few litmus test that manipulation of GDP is not happening
1) Did the credit rating (of sovereign bond) go down ?
2) Did the foreign investments take flight?
3) Did reserves dwindle?

The answers to above doesn't support your assertion

 

[Master Chief]

Dude - are you serious? Stock markets are subject to massive swings and manipulations as they are for investors are doing price discovery (demand-supply and are not purely fundamental based).

There is a popular saying - that sooner or later the market will return to fundamentals but that time can be so long that you loose your investments in the interim.

The fundamentals theory is not incorrect but only holds in long-term. Even then long-term is hard to define and can be anywhere from 3-5 years (10 years is a good marker)

Now if you'd like, I can start listing all the CFA articles, valuation guru (Aswath Damodarans) books etc. etc. but I don't think the level of discussion here, requires it. A google search from your end will suffice - if you're in doubt.

Ah I think you're misunderstanding what I mean by "manipulation". Fair enough.

Stock market "manipulation" as you desrcibe it is akin to "cheating" the house to make profit. The manipulation I meant with regards to GDP is more comparable to accounts manipulation to portray figures as inflated.

You're thinking of Trading Places "manipulation" while I'm thinking of the Manchester City FC variety.

 

[Master Chief]

You're confusing mis-estimation and manipulation - massive difference. Here are a few litmus test that manipulation of GDP is not happening
1) Did the credit rating (of sovereign bond) go down ?
2) Did the foreign investments take flight?
3) Did reserves dwindle?

The answers to above doesn't support your assertion

Sir, folks were not aware of the manipulation, hence (and possibly also for the reasons of overriding geopolitical realities...) these eventualities you suggest did not come to pass.

Institutions may well have known books were being fudged but India was, for 2 decades, too important to turn one's back on over small misdemeanours.

 

[samsite84]

Stock market "manipulation" as you desrcibe it is akin to "cheating" the house to make profit. The manipulation I meant with regards to GDP is more comparable to accounts manipulation to portray figures as inflated.

Ok. Say that mis-estimation happened. The follow-on impact of the mis-estimation has not been on GDP growth, credit ratings and foreign investments (and reserves). All three represent the strength of economy.

Stock market is not an indicator of an economy's strength (from a core metric/driver perspective). One can make "reasonable" guess what would happen to stock if say credit ratings go down - but still that is a "guess". This is esp. true for BSE and many Asian markets where a lot of "gambling" tendencies are seen in stock market. E.g., GoI banned certain types of stock market activties (in options market) because the retail investors were engaging in "gambling" type behavior.