India's stock market has experienced a significant downturn in 2026, with its major equity markets ranking among the worst performing globally, despite the country's economy growing at over 7%. The benchmark Sensex and Nifty indices, representing India's largest companies, recently recorded losses for eight straight weeks, marking the longest losing streak in 25 years.
This market correction has notably impacted domestic investors, with Indian mom-and-pop investors in the Nifty seeing their wealth erode by approximately 15% this year. In contrast, investors in Korea's Kospi index would have seen 62% returns since January.
Foreign institutional investors have also significantly reduced their exposure, withdrawing $40bn from Indian markets in the past two years. The aggregate money foreign investors have put into Indian markets over the past decade is nearing zero after accounting for sales and withdrawals.
Several factors are contributing to this market performance, including persistent energy shocks due to Middle East conflict, with crude oil prices hovering between $90 and $100 a barrel. Rising global interest rates, a falling rupee, and stock valuations that remain relatively expensive despite recent corrections are also cited. Additionally, the absence of a significant presence in the artificial intelligence (AI) sector is seen as a missing piece in India's growth story, with many large companies not investing in future-oriented industries.