Amidst Global Slowdown, Indian Stocks Emerge As Outliers

Amid the global economic slowdown, Indian stocks are outperforming due to local demand.

India's sensex is down less than 1 per cent in 2022 as compared to roughly 25 per cent fall this year in both US' S&P 500 and China's CSI 300.

The Indian stock benchmark has performed significantly well even if the currency depreciation is taken into account.

With the rupee at record low of more than Rs 82 to a US dollar, the Indian stock benchmark is just 10 per cent down. Meanwhile, China's benchmark has fallen 33 per cent.

Demand among the local traders has kept the Indian stocks mostly insulated from the losses due to sales by foreign financial institutions.

Net inflows of around $2 billion were reported for the month of September, a 17 per cent rise month on month, according to the Association of Mututal Funds in India.

According to experts cited in a Financial Times report, domestic investors were upbeat about India's growth prospects.

The investors's interest in Indian stock markets, as per the experts, would improve next year, with the IMF projecting around 7 per cent growth this year for India .

Further, China is grappling with a slowdown in its property sector and the US is expected to fall into a recession.

“People think next year allocation to India will improve dramatically . . . because there’s no other place to invest,” said R Venkataraman, managing director of brokerage IIFL.

India's decision to resist from launching a major stimulus package during the Covid-19 pandemic has made it better positioned than other emerging markets, with inflation is the country at about 7 per cent, according to Amish Sha, head of India research at Bank of America Securities.

“Indian macro is relatively, and I would underline the word relative, well positioned as compared to the global macro,” Shah was quoted by FT as saying.