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Markets Work On Expectations … Not Surprising They Outpace Economy: Radhika Gupta

Indian stock markets have given returns in double digits over a 30-year average. This has not been the case with the Indian economy. Going forward, even as the growth outlook for India remains limited to 5–7%, the stock markets continue to be bullish. Neeraj Thakur speaks with Radhika Gupta, MD and CEO, Edelweiss Mutual Fund, to understand the divergence between the economy and the markets. Edited excerpts:

Why has India’s economy not kept pace with the performance of its stock market? At around 12% annually since 1991, Sensex is growing at double the rate of the economy which is about just 6% to 7%.  What explains this difference over a period of 30 years?