RBI Deputy Governor Poonam Gupta has said India’s bond market has performed well compared with its own past performance as well as several other countries, while Indian equities have not reflected the same optimism around the economy.Gupta made the comments while speaking at the 13th SBI Banking and Economics Conclave on September 23. She said there is some disconnect between India’s underlying economic performance and parts of its financial markets.Key HighlightsRBI Deputy Governor Poonam Gupta said India’s bond market has performed well.She noted that equities have not tracked the same optimism as the bond market.Gupta linked part of the equity-market difference to stronger AI-led growth stories in other economies.She said Indian equities could become relatively more attractive as market conditions change.Gupta also discussed India’s growth, inflation, capital flows and the rupee.What Did Poonam Gupta Say About India’s Bond Market?According to Gupta, India’s bond market has shown strong performance both compared with its own previous performance and with bond markets in many other countries.She attributed the relative strength to factors including the government’s fiscal commitment, expectations of sustained economic growth and the credibility of monetary policy. Declining structural pressures on inflation have also supported the market, she said.Gupta’s comments came at a time when global bond markets have faced pressure from higher yields and changing expectations around monetary policy.Why Are Indian Equities Different?Gupta said equity markets have not reflected the same optimism seen in the bond market.She suggested that one reason could be the stronger AI-led growth narrative in some other economies, which has attracted investor attention and capital. She noted that Indian equities had themselves witnessed a strong run between roughly June 2022 and September 2024.Gupta said that the underlying strength of the Indian economy could eventually be reflected more strongly in equity markets. She added that, based on past experience, Indian equities could become relatively more attractive again as valuations and market conditions change.India’s Economic Growth and Financial MarketsGupta also highlighted what she described as a disconnect between India’s real economy and parts of its financial markets.According to her speech, India is progressing with a growth rate of more than 7 per cent, supported by broad-based economic activity, diversification and rising productivity. She said the economy has remained resilient despite global trade disruptions, energy shocks, geopolitical uncertainty and technology-related changes.She also pointed to India's relatively contained current account deficit, supported by services exports and remittances.What About the Rupee?Gupta also discussed the recent movement in the Indian rupee.She said the rupee had depreciated cumulatively by 13.1 per cent between March 31, 2025 and September 16, 2026. She described the sharp depreciation over the previous one-and-a-half years as potentially temporary and said there was a case for the rupee to stabilise and possibly appreciate from current levels.Gupta also expects India's current account deficit to remain manageable, with services exports and remittances continuing to provide support.What Could Happen to Indian Equities?Gupta did not provide a specific market target or timeline for Indian equities. Instead, she said the underlying strength of the Indian economy could eventually reassert itself in financial markets.Her comments suggest that the relative performance of Indian equities could change as global investment trends, valuations, AI-related investment flows and domestic economic fundamentals evolve.The remarks are an assessment of economic and financial-market conditions rather than a new RBI investment policy or a specific recommendation to investors.
