Sharp corrections in the Indian stock market during last few months have left it one of the worst performing among emerging markets and Asia Pacific in 2015 so far.
Sharp corrections in the Indian stock market during last few months have left it one of the worst performing among emerging markets and Asia Pacific in 2015 so far. Despite having lost nearly a third of the gains made this year, China looks like it will outperform India for the second straight year.
The BSE Sensex has declined 5.02% so far this year and yielded a negative return for the first time since 2011 when the 30-share gauge fell more than 24%. In contrast, China has put on 9.34%.
In 2012, the Sensex returned 25.7%, followed by 9% in 2013 and a stunning 30% in 2014.
However, despite the lacklustre performance, Indian markets continue to command high valuations. The one-year forward price to earning of Sensex is currently 16.84 times. Moreover, despite volatility in the global markets, foreign portfolio investors (FPIs) remain net buyers to the tune of $4.5 billion compared with various emerging markets that have seen net outflows. FPIs, however, sold stocks worth more than $1 billion November.
“We believe the market’s trajectory is linked to the economy. We see steady gains building up, the macro staying supportive, the politics only moderately ruffled, and any significant market dips a buying opportunity,” said Aditya Narain, MD and India strategist, Citi Global Markets.
American investment banking firm Morgan Stanley said in a research note published on November 26 that India continues to be an overweight among emerging markets due to improved fiscal discipline, lower inflation and balanced current account position.