InvestorQ : Is it true that Indian market indices like Nifty and Sensex have bounced much better than other Asian markets?
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Is it true that Indian market indices like Nifty and Sensex have bounced much better than other Asian markets?

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Mary Joseph answered.
3 months ago
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At the beginning of the year, nobody would have imagined that the markets would correct 40% from the peak and then rally 83% from those levels to close at a new high. But that is exactly what has happened during the year. The story of 2020 is not only the sharp V-shaped recovery in the markets, but also the way India got the better of Asian markets.

The big story of 2020 for the stock markets would be the 83% rally in the Nifty from 7610 in March to 14,000 by end of Dec-20. However, that is only one part of the story. What is material is that Indian equities have recovered faster than its South East Asian peers like Hong Kong, Indonesia and Malaysia.

On a comparative basis, most of these South Asian markets have gained about 25% to 35% from the March lows. IN contrast, Indian indices gained 83% from the lows, which is 3-fold the gains recorded by the Asian economies. This is despite the fact that India’s GDP actually contracted by 7.5% in the Sep-20 quarter after falling 23.9% in Jun-20 quarter.

One explanation for this outperformance is that India has been a magnet for foreign portfolio investment flows or FPI flows. FPIs infused Rs.120,000 crore in November and December alone. Unlike the Asian economies, largely reliant on China, the Indian economy is driven more by domestic consumption and local demand. That makes it more immune and the trend more workable.

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