After dominating emerging market (EM) performance for much of the past decade, India’s stock market is now experiencing a period of consolidation, even as peers such as China and Taiwan stage a strong recovery.

Over the past 12 months, the MSCI China Index has climbed 35 per cent and the MSCI EM Index has advanced 26 per cent, while the MSCI India Index has remained largely flat in dollar terms. This pause marks a shift in momentum following India’s prolonged rally.

The recent underperformance comes after five years of exceptional gains. From October 2020 to October 2025, Indian equities delivered annual returns of 13.7 per cent, far outpacing the MSCI EM Index’s 5 per cent growth. In contrast, between October 2015 and October 2020, emerging markets had the upper hand, returning 5.4 per cent compared with India’s 3.6 per cent.

On a 10-year horizon, MSCI India continues to outperform, generating an annualised return of 8.6 per cent versus 5.9 per cent for the broader EM benchmark.

Analysts note that India’s long-term prospects remain strong, supported by favourable fiscal and monetary conditions, a deepening domestic investor base, and superior return on equity compared with EM counterparts. While geopolitical tensions and global risk aversion could trigger short-term volatility, India’s diversified corporate ecosystem and structural growth fundamentals continue to position it as a core holding in emerging market portfolios.

Earnings for MSCI India constituents rose at a compound annual growth rate (CAGR) of 16 per cent during FY22–FY25. Projections indicate a moderate 2 per cent increase in FY25, followed by rebounds of 11 per cent in FY26 and 16 per cent in FY27.