India's market capitalization has dropped below the $4-trillion mark for the first time in over 14 months, driven by a weakening rupee and a declining stock market.
The country, home to the world’s fifth-largest stock market, has recorded the steepest market capitalization decline globally in 2025, plunging by 18.33 percent. Zimbabwe follows with an 18.3 percent decline, while Iceland ranks third with an 18 percent drop, according to Bloomberg data.
India’s total market cap now stands at $3.99 trillion—its lowest since December 4, 2023—down from a peak of $5.14 trillion in mid-December, marking a staggering $1 trillion erosion. Indian rupee weakened nearly 1.5 percent against US dollar year to date, second worst currency in Asia after Indonesian Rupiah.
In contrast, the United States, the world’s largest market, saw a 3 percent increase in market capitalization year to date, while China and Japan recorded gains of 2.2 percent each. Other major markets, including Hong Kong, Canada, the UK, and France, witnessed increases of 1.2 percent, 7.2 percent, 7.1 percent, and 9.9 percent, respectively.
The sharp correction in India’s market was triggered by a 2.6 percent decline in benchmark indices Sensex and Nifty so far this year, while broader indices such as BSE MidCap and SmallCap have dropped over 12 percent and 15 percent, respectively.
The downturn has been exacerbated by sustained foreign investor outflows, with over $10 billion exiting Indian equities this year amid concerns over slowing growth, weak earnings, and elevated valuations. Additionally, apprehensions surrounding a potential tariff war under US President Donald Trump have further dampened sentiment.
The recent market correction also followed remarks from ICICI Pru AMC's CIO, S. Naren, and valuation expert Aswath Damodaran. At the IFA Galaxy conference, Naren cautioned investors against SIPs in mid and small-cap funds, citing market volatility and questioning their long-term viability. His comments sparked widespread debate among market participants.
Meanwhile, Aswath Damodaran emphasized that Indian equities remain among the most expensive globally, despite the country’s rapid economic growth. Notably, China’s Shanghai Composite has outperformed India’s benchmark Sensex so far this year.
Note from Bloomberg: The market capitalization is calculated from all shares outstanding. Bloomberg data does not include ETFs and ADRs as they do not directly represent companies. It includes only actively traded, primary securities on the country's exchanges to avoid double counting as well. Therefore the values will be significantly lower than market capitalization values of a country's exchanges from other sources.
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