The Nifty 50’s long-term consistency suggests that, after a valuation reset and a turn in the cycle, the timing of which remains uncertain, better days could return.  | Photo Credit: wutwhanfoto

When times are tough, it gets even tougher when compared with better-performing players. Indian markets are exactly in that spot today, as demanding valuations, impact on earnings growth from geopolitical turmoil, lack of good AI plays, and currency depreciation push them closer to the bottom of the pile in terms of FPI preference.

In dollar-denominated returns, South Korea’s Kospi is up a staggering 171 per cent in the last one year, Taiwan’s benchmark index TWSE is up 81 per cent, Brazils’ Ibovespa is up 45 per cent and the S&P 500 is up 27 per cent. Against this backdrop, the Nifty 50’s negative 15.3 per cent dollar-denominated returns over the past year make it appear like a clear under-performer.

But what if investors move beyond the T20 timeframe and shift to a Test match horizon? The perspectives change a lot.

A bl.portfolio analysis of five-year dollar-denominated returns across major global indices indicates that while current challenges are real — and there could be more pain ahead — the Nifty 50’s long-term consistency suggests that, after a valuation reset and a turn in the cycle, the timing of which remains uncertain, better days could return. That is why it is important not to throw the baby out with the bathwater.

Consistency intact

When measured through five-year rolling returns over the past decade, India remains among the stronger-performing markets globally.

The Nifty 50 has delivered 10.3 per cent annualised returns in dollar terms positioning it favourably relative to most peers. Only the S&P 500 (12.3 per cent) and Taiwan (12.1 per cent) outperform India in dollar terms, while key markets such as China (1.1 per cent), Japan (3.4 per cent) and Brazil (2.3 per cent) lag significantly despite having outperformed India over the past year.

The distribution analysis of five-year rolling returns in dollar terms, which captures both return potential and downside risk, further highlights India’s relative strength.

no negative return

The data reveal that India has recorded no negative five-year rolling returns, placing it in a select group alongside the S&P 500 and Taiwan’s TWSE. A majority of observations fall within the 10-20 per cent annualised return band (53 per cent), with a further 43 per cent in the 5-10 per cent range. This points to a high degree of return stability and predictability, with limited exposure to extreme outcomes on either the upside or downside.

In contrast, several emerging markets exhibit significantly less favourable return distributions. Brazil, for instance, recorded negative returns in 38 per cent of the observations, while South Korea and China also displayed high frequencies of suboptimal outcomes. Even developed markets such as Germany and Japan showed a more dispersed return profile, particularly on the lower side of the return spectrum.

These comparisons highlight a key attribute of Indian equities: consistent long-term compounding rather than sporadic bursts of high performance.

volatility issue

Further, annualised standard deviation data highlights the volatility profile of major global markets. India’s volatility, at 19.1 per cent, was higher than that of the US and Japan, but lower than most emerging markets such as South Korea, Brazil and Taiwan.

The takeaway is straightforward: while near-term volatility may persist amid evolving global macroeconomic conditions, the longer-term data reinforces India’s position as a relatively stable and consistent wealth creator.

This is perhaps something FPIs already understand, having entered, exited and re-entered India multiple times over the years. What domestic investors need to recognise is that while FII re-entry may be inevitable, the timing may not align with market expectations. Several prominent Indian fund managers have already made predictions on this front that have failed badly.

A number of other factors will need to fall into place before sustained foreign inflows return. While it is prudent to acknowledge current challenges and position investments accordingly, it would be equally unwise to write off the India story based solely on one-year performance headlines.

Published on May 23, 2026