Traditional pre-election rally eludes Indian stocks

After being downgraded to neutral earlier in the year, India has rebounded and is now one of the top-performing emerging markets thanks to its encouraging GDP data, which has cemented its position as one of the fastest-growing economies globally. Strong earnings growth prospects, combined with swelling bids from both domestic and foreign investors, make Indian equities an attractive investment opportunity, despite rich relative valuations, according to Ridham Desai, managing director, Morgan Stanley India. Foreign portfolio investors have poured in more than $6.8bn into Indian markets since March.

​And as emerging markets seem to stage a recovery October last year, India started underperforming especially given how depressed the valuations were in places like Korea, Taiwan and China. That underperformance for India ended in March.

Having started 2023 on a bitter note and even hitting 52-week lows, Indian benchmark indices did a pole vault on Dalal Street that took them to the top 10 best performing markets in the world this year.

Bloomberg proposes to include India FAR government securities in the Bloomberg EM Local Currency Index, which will ensure flows into the Indian markets. Interest rate cuts may be announced in the US, potentially leading to a fall in the Dollar index. FDI inflows in India have been increasing, reaching $85 billion in FY 2021-2022. The Indian government's pro-growth policies and the China-plus-one doctrine are expected to further boost FDI. Investors should consider adding duration funds to their fixed income portfolio and investing in attractively-valued companies in the manufacturing sector.

Franklin Templeton analysts believe that India's remarkable growth in sectors such as aviation, IT, and energy, supported by government policies, makes it an attractive investment opportunity. The country's growing middle class and supportive government programs are driving growth.

New Delhi [India], December 25 (ANI): Cumulatively, the past 12 months have been stellar for investors who parked their money in Indian stocks. Though there has been some turbulence, first during the Adani-Hindenburg episode and lately during the initial days of the Israel-Hamas war, the calendar year 2023 gave handsome monetary dividends to stock market […]

Nifty 50 index has risen 3.5% year-to-date (YTD) and hit a new all-time high on March 7 on the back of strong macro, healthy corporate earnings, and steady domestic institutional investor (DII) buying.

The year started with the persistence of inflation at elevated levels across economies, continuing geo-political uncertainties and tightening financial conditions. The banking turmoil in US (Silicon Valley Bank) and Europe (Credit Suisse) increased risk aversion with the expectations of an early reversal of the monetary tightening cycle, leading to Equity markets to correct and softening of bond yields.

The US Federal Reserve's decision to raise interest rates can have an impact on the Indian market, particularly in terms of capital flows and investor sentiment.

Thanks to foreign investors' relentless buying, the benchmark Nifty50 and Sensex have risen more than 15% from the March lows and reached new highs. Indian equities also joined the club of the best-performing markets in 2023. However, compared to other emerging and developed market peers, India underperforms.