Indian Stock Market emerges top in the world.

29 August 2021

Indian’sequity markethas emerged as the top

 performing among major economies year-on-

year as well as in the year-to-date period,Helped by strong retail and institutional flows amid relatively betterearningsprospects.According to data from Bloomberg, benchmark Indian indices gained 45% and 19% in the past 12 months and year-to-date, respectively.

             INDIA’S OUTPERFORMANCE 

India has outper formed the MSCI World index, a 

 gauge for the developed markets, and MSCI

 Emerging index, a measure of performance of equities in the developing economies, by15% and 29%,respectively in the past 12 months.India’s return correlation with global equities has dropped to 61% from over 80% a few months ago.

Indian equities have added about $1 trillion to the country’s market capitalisationin the past one year, taking it to $3.12 trillion.

               

                 MOST EXPENSIVE

Indian equities trade at 23 times FY22 expected earnings, the most expensive valuation among the top global markets.While the consensus earnings growth for the current fiscal year is trimmed by 2.7%, the FY23 consensus has been upgraded by 2.1% due to improved rate of economic recovery.

                   REASON

Morgan Stanleysaid in a recent report that Indian equities make a strong relative case and an improvinggrowth environment,Mean reversion in margins, lower tax rates and falling interest costs set the stage forstrong relative fundamentals which could lead to India’s re-rating.

Institutional flow from overseas as well as domestic sides aided the equity market returns.FPIs have invested close to Rs 2.2 lakh crore ($31 billion) in the past one year,While retail flow through systematic investment planning (SIP) is at Rs 1 lakh crore.

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