India’s weight in global equity markets falls to levels last seen in mid-2023
India’s share in global market capitalisation has slipped to a 29-month low in 2025, underscoring a phase of relative underperformance for domestic equities amid sustained foreign investor selling and a weakening rupee. Data shows India’s share has declined to 3.47 percent, a level last seen in July 2023, marking a sharp retreat from the all-time high of 4.64 percent recorded at the end of July last year.
The erosion in global standing has accelerated over recent months. India’s share stood at 4.18 percent at the end of December 2024 and about 4.5 percent at the end of September 2024, when benchmark indices were near their peak. Since then, valuation concerns, muted earnings growth and global headwinds have weighed on investor sentiment.
Market capitalisation growth fails to offset broader relative underperformance
The combined market capitalisation of all BSE-listed companies stood at around $5.19 trillion as of December 17, marginally higher than $5.18 trillion at the end of December 2024. Despite this modest increase, India’s total market value remains nearly 9 percent below the record high of $5.66 trillion touched in September 2024.
Analysts point out that while domestic market capitalisation has been largely flat, global equities have continued to expand, leading to a dilution of India’s relative share. “It’s not just about India losing value, but about global markets growing faster,” said a senior equity strategist at a domestic brokerage. “That gap is what’s pulling down India’s share in global market cap.”
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Foreign investor selling emerges as a key drag on equities
A major factor behind the decline has been persistent selling by foreign institutional investors. So far in 2025, foreign investors have sold more than ₹2.56 lakh crore worth of equities in the secondary market, reflecting concerns over stretched valuations, subdued corporate earnings and an uncertain global environment.
The selling pressure has coincided with a depreciation in the rupee, which recently crossed the ₹91 per dollar mark and is widely seen approaching ₹92. Currency weakness has amplified foreign outflows, as returns in dollar terms have come under pressure.
“The combination of equity underperformance and rupee depreciation makes India less attractive in the short term for global funds,” said an emerging markets fund manager. “Until earnings momentum improves or currency stability returns, flows are likely to remain cautious.”
Benchmark indices show resilience, but broader markets lag
Despite the fall in global share, headline indices have delivered moderate gains in 2025. The Sensex and Nifty have both risen around 9 percent so far this year, offering some support to domestic investors. However, the performance has been uneven across market segments.
The BSE MidCap index has edged up just 0.5 percent, while the BSE SmallCap index has declined 9 percent, highlighting the pressure on broader markets. Analysts say this divergence reflects risk aversion among investors, with capital gravitating towards large, liquid stocks while smaller companies struggle amid tighter liquidity conditions.
“Large caps are holding up, but the pain is visible in the broader market,” said a market analyst at a Mumbai-based research firm. “This has also limited India’s ability to gain share in the global market capitalisation pie.”
Global equity market cap hits record highs, widening the gap
In contrast to India’s muted performance, global equity market capitalisation has surged to an all-time high of $147.58 trillion in 2025, up nearly 19.4 percent from $123.61 trillion at the end of December 2024. Strong gains in select global markets, particularly in technology-heavy regions, have driven the expansion.
Among major economies, the United States continues to dominate global equity markets, though its share has eased to 48 percent in 2025 from an all-time high of 50.8 percent earlier in the year. China, on the other hand, has seen its share rise to 8.8 percent from 8.1 percent at the start of the year, reflecting improved investor confidence and selective sectoral recovery.
Japan’s share has remained steady at 5.2 percent, while several other markets have posted incremental gains.
Other global markets gain share as India slips
Hong Kong’s share of global market capitalisation has risen to 4.85 percent from 4.51 percent, while Canada’s has increased to 2.79 percent from 2.5 percent. The UK, France, Taiwan and Germany have also recorded modest improvements in their global standing.
These incremental gains, when combined with strong global equity growth, have contributed to India’s declining share. “In a rising global market, standing still effectively means losing share,” noted an international markets strategist. “India needs both earnings growth and stable flows to reclaim lost ground.”
Outlook hinges on earnings recovery and currency stability
Looking ahead, market participants believe India’s position in global market capitalisation will depend on a recovery in corporate earnings, a turnaround in foreign investor sentiment and stability in the rupee. Progress on trade negotiations, global interest rate trends and domestic policy signals will also play a crucial role.
While long-term structural fundamentals remain intact, analysts caution that near-term volatility could persist. “India’s growth story hasn’t disappeared,” said a senior portfolio manager. “But reclaiming global market share will require patience, better earnings visibility and a more supportive global environment.”
For now, India’s slide to a 29-month low serves as a reminder that global capital is increasingly selective, and relative performance matters as much as absolute returns.
