India may have reclaimed its spot as the fifth largest stock market in the world, but when it comes to the returns generated during the last financial year, the country ranks second after South Africa among the BRICS group of emerging markets. Yet, India’s gain of 0.7 percent during the year outpaces the other three nations — Brazil, Russia and China.

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European markets — France and Germany yielded the best returns in FY23 with gains of 9.9 percent and 8.4 percent, respectively, showed the Reserve Bank of India (RBI) annual report for FY23. While South African equities surged 2.9 percent in FY23, the UK and Japan saw their indices rising up to 1.5 percent.

Earlier this week, the Indian market recouped its fifth spot from France, after losing that status to the European nation in January. While China occupies the second spot with $10.2 trillion, Japan and Hong Kong are placed third and fourth with over $5 trillion market cap, Bloomberg data showed.

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Domestic equities gained in early March 2023 buoyed by positive domestic and global economic data releases. Subsequently, concerns over financial stability in the wake of rapid monetary policy tightening came to the forefront amid banking sector turmoil in the US and Europe, said the Reserve Bank of India (RBI), in its annual report for FY23. The central bank further added, “Markets recovered towards month-end, as contagion fears receded on assurances from several stakeholders and regulators regarding the health of the global banking sector.”

(Source: RBI Annual Report)

At a time when heightened global uncertainties marred the performance of equity markets across the world, the Indian equity market exhibited resilience during the financial year. Interestingly, the US market which accounts for about 43 percent of the world equity market featured among one of the laggards with a 9.3 percent fall, whereas Brazil lost the most with a 15.1 percent decline.

However, the return of foreign investors and improved earnings in the first quarter of FY23 restored investors’ confidence back in India. The foreign portfolio investors (FPIs) turned net buyers in the Indian equity market in July 2022 after a gap of nine months. Notwithstanding weak cues from global markets, Indian equities gained further in August 2022 supported by strong macro-economic data releases and softening of domestic inflation.

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