Ever since the Federal Reserve cut its key interest rates on August 17 to keep the US economy from a possible recession after the US sub-prime crisis, India has become Asia?s best investment destination after Indonesia.

The 30-share Sensex of the Bombay Stock Exchange has remained the second-highest gainer after the Jakarta Composite. The Jakarta Composite index fetched investors returns of 39.82% from August 17 to date and the Sensex managed 39.29%. This was followed by Hong Kong?s Hang Seng with 35%. Other Asian indices like China?s Shanghai Composite, South Korea?s Kospi and Malaysia?s Kuala Lumpur Composite Index (KLCI) fetched returns between 14% and 18%.

Experts believe that as far as Indian markets are concerned, the story is based on strong economic fundamentals and it is likely to stay the course over the next few years, at least. They also believe India is still an attractive destination vis-?-vis valuations compared with other Asian emerging markets.

Arpit Agarwal, head-research, Arihant Capital Markets, said, ?It?s not that the rupee is appreciating against the dollar, but the greenback is depreciating not only against the rupee but also against other currencies. But growth of the Indian economy is quite visible in the way the Indian companies are performing and the markets have huge support coming from mutual funds and domestic institutional investors, too. So the US credit market crisis is less likely to impact the Indian bourses.?

He added, ?A few sectors like infrastructure and power, which are intrinsically driven, are going to boost the economy further. The economy as a whole is going to outperform its Asian counterparts.?

Analysts also believe the movements in the bourses are riding the India story and the country?s lesser dependence on export-led growth. Whenever the global cues are weak, Asian markets get worst-hit, while the fall in the Indian market is limited. Similarly, when there is an overall buoyancy, the rise in the Indian market is faster than its peers in the region. ?This is all because of the strength displayed by the Indian economy and its potential to do so in coming years,? dealers said.

But few analysts warn that the rupee?s appreciation against the dollar may play spoilsport for some sectors.