Indian Stock Market's Resilience Amid Global Uncertainty

The Economic Survey warns of the Indian stock market's sensitivity to potential corrections in US markets, especially given a rise in retail participation by young investors. Despite increased resilience due to local investments, historical trends show India's markets remain susceptible to US market fluctuations.

The latest Economic Survey highlights possible repercussions for the Indian stock market from a US market correction, particularly due to a significant rise in young retail investor participation post-Covid. The document emphasizes the historical sensitivity of Indian markets to US fluctuations, warning that a correction there could impact investor sentiment and spending.

Despite the Indian market's growing resilience, demonstrated by reduced sensitivity to Foreign Portfolio Investor outflows and a declining Nifty 50 and S&P 500 beta, the Survey notes historical patterns of significant downturns following US market corrections.

Investor numbers have surged from 4.9 crore in FY20 to 13.2 crore by December 2024, supporting market highs despite global and domestic challenges. The rise is attributed to active regulatory measures and listing activities, with India leading in global IPO listings, highlighting potential for sustained growth.

(With inputs from agencies.)