The Nifty has underperformed the broader emerging markets index by 10 percent in the last six months. Compared to early December, when the Nifty had peaked, it has corrected 8 percent till now, underperforming the MSCI EM index by 10 percent
What explains a sudden spurt in investors’ renewed enthusiasm for favouring Indian equities even as the world is grappling a ‘sinking feeling’ due to a series of uncertainties? Perhaps, a misplaced exuberance and an unsettling belief that India is a shiny spot with investors worldwide explicitly rushing for cover as recession risks rise eating into corporate balance sheets and further stagnating economic growth.
Well, nothing much has materially changed for the Indian markets in the past few months except that foreign investors are viewing India through a prism of confidence and hope that the Asian sub-continent will lead a rally of stocks. What comforts investors favouring India are corrections in relative market valuations and resilient equity inflow.