Bear markets often witness sudden upswings and the investors mistakenly believe them to be the return of a bull run. The graphs below show that such short-term rallies are much steeper in Indian markets than those in the US.
BSE Sensex Annual Returns (since 1979-80)
The Sensex has declined 38% in 2008-9, making it the second worst financial year for Indian equities in the past three decades. 1992-93 was the worst year, when the Sensex declined 47%, but the next year it rose by 66%.
Movement of the Sensex during the rule of unstable governments
Past data indicates that coalition governments at the Centre can still boost the stock markets.
The Indian corporate sector seems well-placed to weather the slowdown. Stable EBITDA margin and financial leverage have led to an improvement in the net profit margin and RoEs in the past five-six years.
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