Nifty stagnation: Why returns stayed flat for 2 years

Edelweiss’ phrase “two-year round trip” has become a shorthand on social media for what many investors feel in Indian equities: plenty of movement, but little to show for it. Posts and commentary over the last two years repeatedly return to the same set of drivers - foreign flows, currency, earnings momentum, valuations, oil and geopolitics, and the fact that global leadership has been unusually narrow and tech-heavy. The discussion is not about a single trigger. Instead, the consensus is that several headwinds arrived together and, crucially, did not ease at the same time.

Below is a structured read of what is trending across Reddit and other social channels, using only the points and figures being cited there.

The “two-year round trip” investors keep referencing

Edelweiss is being quoted describing the period as a “two-year round trip,” where investors who entered during the 2024 rally have seen flat-to-negative outcomes despite sharp swings. Some posts frame the broader experience as roughly “zero return” since around September 2024, with smaller indices correcting meaningfully. Others go further and claim that, technically, the market gave about a minus 20 percent return over roughly two years, while also acknowledging that performance differed across indices. The common thread is frustration with volatility that has not translated into durable upside. Commentators also point out that domestic inflows were strong, yet that did not automatically lift benchmark returns. That tension is used to argue that what mattered most was incremental flow at the margin, especially from foreign investors. Several threads also mention that the market lacked “fresh positive triggers,” making it harder for momentum to rebuild after each dip. The result, in these narratives, is a market that felt busy but not rewarding.

Flows first: sustained FII-FPI outflows dominate the narrative

Across platforms, the most repeated explanation is persistent FII-FPI outflows. Ajay Garg of SMC Global Securities is quoted saying India’s relative underperformance is largely driven by sustained FII outflows and sectoral imbalances. Multiple posts argue that when the biggest buyers step back, prices struggle to compound even if domestic investors keep buying. A strongly worded thread claims foreign institutional investors pulled nearly Rs 1.5 lakh crore out of Indian markets since late 2024, and links that move to stronger opportunities in the US. Other comments generalise this as global investors finding “better global opportunities” and diverting capital away from India. Some discussions also add that promoters and PE firms were able to exit smoothly because domestic liquidity was strong, but that this still weighed on sentiment. The combined takeaway is that domestic inflows may have softened declines, but did not fully offset persistent foreign selling. In that framing, the market’s stagnation is primarily a flow story.

Why US bond yields changed the risk equation

A second driver frequently mentioned is the level of US bond yields. Ajay Garg is quoted linking the selling pressure to geopolitical tensions and higher US yields in the 4.3%-4.5% range. Social-media posts interpret this as a higher hurdle rate for equities globally, especially for emerging markets. The argument is not that India’s fundamentals suddenly deteriorated, but that global capital had an easier alternative with attractive yields. Several threads also use the phrase “safer returns” to explain why global investors became more cautious on emerging markets. This narrative is often paired with a “Fed is more aggressive” tone, which is cited as unsettling investors across Asia. When yields rise and uncertainty increases, posts suggest that risk appetite falls and flows become intermittent. That interplay is presented as a steady headwind rather than a one-off event. In short, higher yields are described as a competing product for global money.

Rupee depreciation and the foreign investor return problem

Currency drag is the next layer repeatedly cited in the discussions. Ajay Garg notes that a 2%-3% rupee depreciation reduced foreign investor returns and helped keep markets subdued. The point made across posts is straightforward: even if the index is flat in rupees, a weaker currency can make returns negative in dollars. That can reinforce outflows because performance looks worse on a foreign investor’s scoreboard. Currency weakness is also linked in posts to oil and geopolitics, suggesting that these factors can amplify each other. In some threads, the rupee is described in dramatic terms, but the core mechanism remains the same - depreciation reduces realised returns for overseas holders. Commentators also say this currency effect mattered even in a period where India had 6%-7% GDP growth expectations, because market returns are not just about growth. The overall conclusion is that currency was not the primary cause, but it magnified the impact of foreign selling. That is why it keeps appearing alongside flows in social-media summaries.

Earnings momentum: why “single digits” became a sticking point

Muted earnings is the most consistent domestic fundamental explanation in the trending debate. VK Vijayakumar of Geojit Investments is quoted by TOI saying that “during the last six quarters, earnings growth has been in single digits,” and adding that “in the long run, the market is a slave of earnings.” Posts also contrast India’s earnings with the US, where S&P 500 companies are said to be posting 12% earnings growth this year. The implication being drawn is that global capital will chase markets where earnings upgrades are clearer and broader. Separate commentary says the market looked weak despite benchmarks trading near lifetime highs, partly due to deceleration in earnings momentum since the June 2024 quarter. Sunny Agrawal of SBI Securities is cited saying FY20–FY25 saw a robust 18% CAGR, but the more recent pace has been slower. Some threads summarise this as “valuation and earning disappointment” working together. Others describe the earnings picture as slower and uneven rather than outright bad. Either way, weak earnings momentum is being treated as a key reason rallies faded.

Valuations and the slow reset in mid and small caps

Valuation concerns appear repeatedly, especially when explaining why foreign investors stayed cautious. Multiple posts say Indian markets were trading at a premium versus global peers and that valuations were stretched into late 2024. One strong claim says small and mid caps were at “extremely high valuations,” and that what followed was not a crash but a reset. Another comment says there is a “valuation trap,” where other markets offer better valuation compared to India. The key idea is that expensive starting points can limit forward returns even if the economy grows. Posts also suggest that a reset takes time because expectations need to recalibrate. Some commentary quantifies the correction in smaller indices as roughly 20% to 40%, while also calling out that the broader benchmark return stayed near zero over a long stretch. That mix of a sideways benchmark and correcting broader market is used to explain why investor sentiment felt fragile. In the social narrative, valuations did not cause every down day, but they made every rally harder. This is why valuation comes up as both a deterrent for foreign flows and a limiter of domestic risk-taking.

Oil, geopolitics, and why India feels the shock more

Geopolitical and geoeconomic uncertainty is a recurring backdrop in the posts, often linked directly to oil. Several threads mention Middle East tensions and even a potential US-Iran conflict as factors pushing crude prices higher in recent weeks. The logic then returns to India’s sensitivity because India imports over 80% of its crude oil, a figure repeated across posts. Higher crude is described as feeding inflation, widening the current account deficit, and leaving the RBI less room to cut rates. This, in turn, is presented as negative for equities through both growth expectations and valuation multiples. Some posts also describe a risk-averse atmosphere in markets when conflicts intensify, with a more hawkish Fed tone and higher oil unsettling Asia. Importantly, these threads treat geopolitics as an amplifier - it can worsen oil, weaken currency, and reinforce foreign selling at the same time. That is why oil and geopolitics are usually not listed as stand-alone causes, but as part of a chain. The overall takeaway is that India’s import dependence makes oil shocks more market-relevant than in countries that produce more of their own energy.

Index composition: the AI-led global rally did not translate cleanly

Another widely repeated explanation is that global leadership has been narrow and tech-heavy, while India’s index mix is different. Ajay Garg contrasts the US, where tech and AI stocks fuel growth, with India, where financials and consumption dominate. Several posts frame the AI boom as primarily a US story, citing examples like Microsoft’s AI business growing 123% year over year and reporting $12.9 billion revenue last quarter, along with mentions of Alphabet, Nvidia, and Apple as part of the same earnings-led theme. The argument is that these are large, revenue-rich platforms that India does not have at the same scale, so India did not benefit equally from the same global trade. Some discussions link this directly to relative underperformance, saying India had “limited exposure to the global AI-led trade.” There is also a domestic angle: banking and financial stocks are said to have heavy weightage, with one post citing about 20% weight in Nifty 50. When banks face margin pressures, cautious credit growth outlooks, or profit booking, the index can feel heavy. Put together, composition becomes a structural explanation for why global rallies did not automatically pull Nifty higher.

What the “next phase” depends on, based on the same threads

Across platforms, the forward-looking point is consistent: the next phase depends on whether the headwinds ease together. Posts suggest that a reversal or stabilisation in FII-FPI flows would matter most because it has been the dominant force in the narrative. A steadier currency is also framed as important, because it improves foreign investor realised returns and can change allocation decisions at the margin. On fundamentals, the market is repeatedly described as needing stronger earnings momentum, not just expectations of GDP growth. Several threads also argue that the market needs a “fresh positive trigger” to rebuild risk appetite, particularly after a valuation reset. Oil is treated as a swing factor because it feeds into inflation, the current account, and the rupee, all of which influence sentiment. Finally, the index-composition debate implies that India may need broader sectoral participation to outperform in a world where global leadership is still concentrated. None of these are presented as guarantees, but the social-media consensus is clear about what variables investors are watching. If those variables move in the same direction, the “round trip” narrative may finally break.