After becoming the world’s fifth-largest economy, India is now the fifth-biggest equity market as well. While global equities collapsed under the weight of two Black Swan events — the Covid pandemic and the Ukraine war – the Indian share market held firm in 2022.
The relative outperformance has propelled India’s share in global market cap to an all-time high of 3.5%, rebounding from a low of 2.05% on May 19, 2020, in the aftermath of the pandemic-triggered collapse in share prices.
India’s strong economic growth makes country attractive
Indian markets decoupled from other markets in the short term
Strong FII flows driving markets since August
MSCI India index has outperformed the MSCI Emerging Mkt index by 27% in the past 12 mths
WHAT IT MEANS
Rise in share because of relative performance
In absolute terms, Indian market has been almost flat
High valuations mean Indian market more at risk in case of adverse events
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