RBI's Poonam Gupta: India's Bond Market Is Outperforming While Stocks Lag the Global AI Trade

Reserve Bank of India Deputy Governor Dr. Poonam Gupta stood up at SBI's 13th Banking & Economics Conclave in Mumbai on September 23 and delivered a blunt diagnosis: India's bond market is doing great. Its stock market, not so much.

According to Informist Media, Gupta told the conference India's bond market "has performed well, both compared to its own past as well as in comparison to most other countries." She credited the government's fiscal commitment, the credibility of RBI monetary policy, and declining structural inflation pressures. The Reserve Bank's own bulletin, cited by LiveMint, repeated the same framing days later.

The Rupee Story

The number that matters most for anyone holding rupees is this: the currency has depreciated 13.1% on a point-to-point basis between March 31, 2025 and September 16, 2026, according to Gupta's own remarks reported by Informist. She called that an "overcorrection" and said there's "a fair case for the rupee to not just stabilise but perhaps even appreciate from the current levels."

Nobody in these reports offers a hard mechanism for why the overcorrection reverses on any particular timeline.

Inflation: The Numbers Don't Fully Match the Confidence

Gupta said she expects inflation to stay inside the RBI's 2-6% tolerance band through FY27, crediting "credibility of monetary policy" and "declining structural pressures." The RBI's Monetary Policy Committee in August actually cut its FY27 headline inflation forecast by 10 basis points to 5.0%, per Informist.

But the same report notes actual CPI inflation hit a 20-month high of 4.82% in August, up from 4.45% in July, and up sharply from just 2.01% a year earlier. That's a real acceleration sitting alongside official talk of "declining pressures." The gap between forecast disinflation and the actual 20-month-high print suggests either trend could dominate over the next two quarters.

Four Shocks at Once

According to corplawupdates.in, Gupta argued India has absorbed nearly every global shock simultaneously: among the highest U.S. tariff rates imposed on any trading partner, oil-price disruption as a major net importer, El Niño-linked agricultural risk, and capital outflows tied to global AI investment enthusiasm rather than any domestic AI upside. Despite that, she said GDP growth hit 7.8% in both 2025-26 and the first quarter of 2026-27.

The newsletter thechatter.zerodha added that the IMF's 2026 Fiscal Monitor projects India's public debt-to-GDP ratio falling 5.7 percentage points by 2031, a contrast Gupta drew against countries that "pump-prime their economies beyond their productive capacities." That's fiscal discipline getting rewarded in the bond market. It's a fair point: don't spend money you don't have, and bond investors will notice.

Why Stocks Are Lagging

Gupta's explanation for weak Indian equities, per LiveMint, is that capital is chasing the "AI-led growth" story concentrated in a handful of foreign markets. She singled out South Korea's KOSPI and Taiwan's TAIEX, both heavily weighted toward a few chipmakers, TSMC in Taiwan and Samsung Electronics and SK Hynix together making up more than half of the Korean index. Indian equities, she noted, had their own exceptional run from roughly June 2022 to September 2024, but other markets are simply having a better run right now.

That framing lines up with what actually happened on Wall Street the same week. According to the Epoch Times, the Nasdaq Composite surged 2.06% for the week ending September 25, closing at a new all-time high on gains in Meta Platforms, AMD, and Microsoft. The semiconductor-focused SOXX index jumped 7.43% for the week, AMD crossed $1 trillion in market capitalization, and Intel shares rose 13.26%. Meanwhile the Russell 2000, more sensitive to interest rates, fell 0.8% for the week, its worst performance among major indexes.

The Yield Problem Nobody Is Solving Yet

The same AI rally that's lifting U.S. tech stocks is happening alongside a bond market that's anything but calm. The Epoch Times reported the 10-year Treasury yield touched 5.15% on Thursday, September 24, its highest level since 2007, before easing slightly to around 5.1% by Friday. The 30-year yield climbed above 5.44%, a level not seen since 2004.

Meta's AI-agent news also knocked the S&P 500 Financials Index down 1.59% for the week on worries the technology could cut into the investment advisory business, per the Epoch Times. Oil added more volatility on top of it: Brent crude swung from roughly $101 a barrel down below $90 on hopes for an Iran diplomatic resolution, then reversed above $103 and briefly touched $108 before settling near $104, as the U.S. and Iran signaled possible progress on restoring Persian Gulf exports ahead of a scheduled meeting between President Trump and Chinese leader Xi Jinping in Washington.

What's Actually Unresolved

Gupta's central claim is that India's calm bond market and low debt trajectory eventually pull equity investors back in. A survey by the World Economic Forum, cited by LiveMint, found nearly three-fourths of chief economists expect India to post strong or very strong growth over the next 12 months, which supports her optimism.

But nothing in these reports pins down when a rupee "overcorrection" actually corrects, or whether global capital chasing AI-linked chip stocks in Taipei and Seoul reverses on any predictable schedule. The next real test comes with India's Q2 FY27 growth print and the RBI's coming Monetary Policy Committee decisions, where the gap between forecast disinflation and an actual 20-month-high CPI print will either close or widen.