SHINING RESILIENCE

Despite global market uncertainty, the Indian market remains better positioned than its peers and may offer stable to moderate returns in the coming year

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The global investment sentiment is uncertain due to multiple simultaneous events. The Covid-19 pandemic has turned optimistic investors into unemotional bystanders. The ongoing conflict between Russia and Ukraine has far-reaching consequences, impacting crude oil prices. Macroeconomic challenges like inflation and interest rates further contribute to the uncertainty. Additionally, a banking crisis in the United States adds to the concerns. These interconnected factors create a fragmented and unpredictable investment environment.

Against the backdrop of these developments, a key question that might arise in the minds of investors is: How do the Indian markets fare when compared to global markets? Let us understand this in greater detail.

INDIA’S MACRO STORY

In recent months, Indian equities have benefited from a reallocation of funds by foreign portfolio investors (FPIs) from other Asian economies. According to data from NSDL and Bloomberg, Indian equities have attracted an inflow of $3.2 billion ( 26,333 crore) since the beginning of April ’23, one of the highest among major economies.

A key reason for this is that foreign investors have become more optimistic about the Indian markets. They are positive about the strengths of India’s domestic economy, such as its large and growing population, its young workforce, and its strong economic fundamentals.

Analysts point out that foreign investors have reduced their exposure to Asian economies whose fortunes are tightly linked to the US economic growth. Taiwan and South Korea are two such economies.

It is important to note that major global chipmakers, which have a significant weight in the stock indices of Taiwan and South Korea, have issued profit warnings. This is largely due to the slowdown in demand from the US market.