Is There a Link Between GDP Growth And Equity Returns?

Does higher GDP growth translate into higher stock market returns? Data compiled by BloombergQuint shows that there is hardly any correlation between stock market returns and GDP growth rates.

Blocks of five-year periods have been used to track how Sensex returns fared vis-a-vis average GDP growth rates during the same period.

During 1991-95, when GDP growth rate averaged only 4.8 percent, returns from the Sensex stood at nearly 200 percent. Similarly, Sensex return was 137 percent over 2001-2005 when GDP growth averaged 5.8 percent. When the average GDP growth rate was highest at 8.6 percent during 2006-10, Sensex delivered return of 118 percent, much lower than returns during 1991-95 and 2001-05 periods.