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Indian market shrugged off inflation, rate hike fears; outperformed peers this year

Indian market shrugged off inflation, rate hike fears; outperformed peers this year

Data available with Ace Equity, BSE, and Trading Economics showed India's visible outperformance over its global peers. In contrast to the global market slide, Indian benchmark BSE Sensex has gained 2.88 per cent this year.

Sensex has gained 2.88 per cent this year. Sensex has gained 2.88 per cent this year.

Indian stock market has shown resilience against the global economic downturn amid several agencies predicting that the country would be the growth engine for the years to come. Data available with Ace Equity, BSE, and Trading Economics showed India's visible outperformance over its global peers. Tech heavy Nasdaq index of USA has declined 26.16 per cent this year (till September 15), while Germany’s DAX has plunged 18.43 per cent, French Market Index CAC 40 has lost 13.91 per cent market valuation, Chinese Shanghai composite index declined 12.08 per cent, Japan’s Nikkei 225 fell 4.25 per cent and British index FTSE 100 has slipped 1.39 per cent).

In contrast to the global market slide, BSE Sensex has gained 2.88 per cent this year.

Currency depreciation against the US dollar is a common concern for most economies this year. The Indian rupee has slid 7.70 per cent against the dollar on a year-on-year (YoY) basis. However, the Japanese Yen has depreciated 23.30 per cent; British Pound dropped 17.18 per cent; Euro declined 15.08 per cent; and the Chinese Yuan fell 8.22 per cent.

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Rising crude and gas prices have escalated the inflation numbers globally. The United Kingdom recorded the latest inflation at 9.9 per cent; followed by Eurozone (9.1 per cent), the United States (8.3 per cent), Germany (7.9 per cent), India (7 per cent), France (5.9 per cent), Japan (2.6 per cent) and China (2.5 inflation).

It can be noted that India is also facing currency depreciation and inflation pressure, even as the country has done a better job than many developed economies.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said, "There are two broad market trends now. One, globally markets have turned weak on renewed inflation concerns and the market consensus is that the Fed's terminal rate would be clearly above 4%. This will weigh on global markets. Two, India's outperformance is strong and consistent. This has fundamental support from a strong economy and good earnings visibility. There is a clear message from the performance of the S&P 500 (down 18 per cent YTD) and Nifty (up 3 per cent YTD).”

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The stock market watcher also said, "This divergence in performance between global and Indian markets has steam to sustain in the near term. Recent strong market performance validates the success of the 'buy on dips' strategy. Buyers are chasing banks, autos, FMCG, telecom and construction-related segments which are likely to come out with good results in the coming quarters. Even while remaining invested, investors should exercise some caution arising from high valuations."