Why sensex is in green even as other major global indices bleed

MUMBAI: With over 8% year-to-date (YTD) gains, sensex is currently the best performing major index in the world in 2022. This gain is in stark contrast to most global indices that are currently performing. bathed in red. The investment community first bore the brunt of soaring commodity prices caused by the Russo-Ukrainian war, followed by rapid interest rate hikes that pushed many economies to the brink of recession.
Sensex was also hit by the global gloom – on June 17 (the low of the year), sensex was down almost 12% year-on-year at 51,360. However, it has rallied 19% since then to cross the 63,000 mark on Wednesday.
By contrast, in the US, the Dow Jones is down nearly 7% year-to-date, the broader S& has fallen 17%, while the tech-heavy indexes are down. Nasdaq was reduced by 30%. Japan’s Nikkei is down 3% year-on-year, while Hong Kong’s Hang Seng has plummeted 21% (see figure).
So why is there a bullish bias on Dalal Street when most other major markets are still under the control of the bears? Market participants say that Indian stocks outperformed global stocks because of relatively stable macroeconomic conditions despite external uncertainties. Market analysts say increasing GST collection, capital spending and credit demand, and falling inflation are some of the factors that suggest steady economic growth.
“India seems like an oasis in the desert, growing at a time when most economies are dozing off. Indian businesses have also demonstrated resilience in the post-war period. pandemic,” said Lakshmi Iyer, CEO (investment consultant), Kotak Investment Advisor.
According to market participants, China’s crackdown on influential tech giants and its ‘Covid-Zero’ policy are also benefiting India. “The wall of confidence is crumbling for investors in Chinese stocks. As a result, we’re seeing China’s weight in the MSCI (index) index,” said Basant Maheshwari of Basant Maheshwari Wealth Advisors. down and India benefits from that.”
Earnings in certain sectors have been insulated from the rise in global energy prices to some extent, due to their accessibility to resources such as coal, said LKP Securities’ S Ranganathan. A normal monsoon season also supports India Inc., he added.
Prices of raw materials such as rubber, which have surged in the first half of this year, are also falling globally, supported by China’s strict Covid-19 restrictions. “The drop in oil prices to around $80 a barrel is a huge positive for our oil-dependent economy,” said Siddhartha Khemka of Motilal Oswal Financial Services.
Market participants say the increasing contribution and purchase of SIPs by domestic institutional investors amid a sell-off of nearly Rs 1.3 lakh in foreign funds during the year boosted Indian stocks. . “Strong support for the market is now starting to come from foreign investors, who largely missed this rally,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services. . In November, foreign investors bought a little more than Rs 45,000 worth of Indian shares, according to CDSL and BSE data.


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