India vs China: Dalal Street Beats Chinese Market Performance Since 2000, says Report

Indian Stock Markets: Indian equity markets have consistently outpaced China’s since 2000, delivering higher real returns, according to a report by Deutsche Bank. While China’s robust economic growth has translated into real equity returns of 4.0 per cent annually since 2000, India has emerged as a standout performer, offering one of the highest real returns globally at 6.9 per cent annually during the same period.  

"India has one of the highest real equity returns (+6.9 per cent per annum) among both emerging (EM) and developed markets (DM) from 2000 to 2024," the report highlighted.  

India-US markets at record highs

As of 2024, the report noted that India and the United States are among a select group of markets trading near record-high Cyclically Adjusted Price-to-Earnings (CAPE) ratios. This valuation metric smooths earnings over a 10-year period, reducing the impact of cyclical fluctuations. However, it may not fully capture structural changes driving market dynamics.  

The report drew parallels with the US, where the S&P 500’s CAPE ratio, after reaching unprecedented highs at the turn of the millennium and dipping in the early 2000s, has climbed back to levels only briefly exceeded in the last century.  

Positive growth outlook in Indian markets

Advancements in technology, artificial intelligence (AI), and shifts in earnings expectations underpin these elevated valuations for the US "Bulls argue that tech dominance and AI advancements represent a structural shift for the US, while India's positive growth outlook makes investors willing to pay a premium for its potential," the report stated.  

India’s strong growth trajectory and emerging role in global markets explain its elevated valuations, the report suggested. As India and the US head into the next quarter-century (2025-2049), they begin on a high note but remain comparatively expensive markets. Their growth paths will depend heavily on investor confidence in their structural strengths and future potential, making them key markets to watch. 

(With ANI inputs)