India’s equity market now world’s top performer

Even as benchmark indices Sensex and Nifty touch new highs, the country’s equity market has reportedly emerged as the leading performer among key economies.

From data reported in news reports, the benchmark index (Nifty) in India has risen 45 per cent and 19 per cent in the past one year and year-to-date (YTD), respectively. Accordingly, India has outshined the MSCI World Index and the MSCI Emerging Markets (EM) Index by 15 and 29 per cent, respectively. The MSCI World Index is a measure of performance of large and midcaps across 23 developed markets, while the EM Index is a gauge of midcap and large cap performance across 27 emerging markets like China, South Korea, Mexico and Taiwan.

How other markets performed?

Data suggests that while the Australian benchmark AS30’s one-year performance rose 23.34 per cent and YTD at 14 per cent, the UK’s FTSE rose 18.44 in one year and 10.67 per cent YTD. Also, China’s SHCOMP index went up 4.94 per cent in one year and 1.94 per cent year-to-date. The US DOW gained 25.34 per cent over one year and 15.68 year to date. India leads the table of leading performers including these and other countries like Brazil, Japan, Germany, Taiwan, Canada and France among others. India’s Nifty’s performance of 45 per cent increased in one year and YTD of 19 per cent is followed by Mexico’s Mexbol index which rose 36.85 per cent in one year and 18.79 per cent YTD.

For the month of August, the Sensex and Nifty have thus far risen almost 6 per cent, almost three times more than the near 2 per cent increase in the MSCI World Index. The MSCI EM, meanwhile, has dropped 0.2 per cent for the same period.

In June 2021, India’s market cap had risen 66 per cent in a year to touch $3.2 trillion, which outshone the global market cap of 44 per cent. In May, India beat Germany to join the elite $3 billion market cap club and now stands seventh in the list of economies with the most market cap. The United States and China top the list with $51396 billion and $12,164 billion respectively. The UK and France lead the $3-billion club, with India and Canada bringing up the rear.

Inflow of FII

India’s performance has largely been led by foreign portfolio investments. In the fiscal year 2020-21, FPIs invested over Rs 2.75 trillion or $37 billion into the Indian stock markets, the highest such an investment in the past two decades, according to data from the National Securities Depository (NSDL). The previous occasions India received such an inflow of foreign institutional/portfolio investment was in 2012-13 and 2009-10, when it exceeded $20 billion. Comparatively, in the 2019-20 fiscal, FPI stood at $90.37 million, according to reports. Because of foreign fund inflow, the benchmark indices Sensex and Nifty 50 both gained over 70 per cent in FY 2020-21.

Although foreign investors may have been treading cautiously because of the second wave of the pandemic and more recently, the US’s signalling over a likely interest rate hike, FPI holdings touched $592 billion in the April-June period, which is a 7-per cent increase from the earlier quarter.

Meanwhile, Indian equities have seen a higher valuation among other world markets, trading at 23 times expected gains for FY22. The consensus earnings growth for FY22 has been reduced to 2.7 per cent but the consensus for fiscal 2023 has seen an upgrade of 2.1 per cent on the back of an enhanced economic revival.

Conclusion

India’s equity market, largely contributed by foreign institutional investments, has emerged as the leading performer among major economies on a year-on-year and year-to-date period. India’s Nifty has beaten both the MSCI World Index and Emerging Markets Index by 15 and 29 per cent, respectively over the last one year.

FAQs

How has India’s benchmark Nifty performed compared to global economies?

India’s Nifty has beaten the MSCI World Index and Emerging Index by 15 and 29 per cent, respectively in the last one year. The Nifty rose 45 pc over one year and 19 pc over the year-to-date period.

What are the MSCI World and Emerging Markets indices?

The MSCI Emerging Markets index is a measure of performance of mid and large cap stocks in 27 emerging markets, including China, Taiwan and South Korea, among others.

The MSCI World Index tracks performance of large and midcap stocks across the world’s 23 developed markets.