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India outperforms EM peers in the first six months of 2021; Analysts still remain bullish on Markets:
FPIs are quite optimistic on the Indian bourses as Indian Inc. have done fairly well despite the pandemic hiccup and the Indian government has been proactive with a slew of fiscal incentives initiated to combat the prevailing threats. The Bourses have also done extremely well after the first Covind impact thanks to vaccine and other initiatives of the GOI to boost investments.
In dollar terms, benchmark indices, the Sensex and the Nifty, jumped 8.26% and 10.81%, respectively, compared to 6.94% gains by the MSCI Emerging Markets index during the period, while the MSCI World index rose 12.46%.3 min read Vaccination drive, stimulus packages and RBI measures kept investors glued to Indian equities
Gains from the Indian stock markets outpaced emerging markets (EMs) in the first six months of 2021, despite the uncertainties amid the second wave of covid infections. The increasing pace of vaccination, the government’s stimulus packages and the Reserve Bank of India’s liquidity support mechanisms kept investors glued to Indian equities during the January-June period.
In dollar terms, benchmark indices, the Sensex and the Nifty, jumped 8.26% and 10.81%, respectively, compared to 6.94% gains by the MSCI Emerging Markets index during the period, while the MSCI World index rose 12.46%.
In rupee terms, the Sensex and Nifty gained 10% and 13%, respectively, since January, the best six-month performance in the past five years. Between January and June 2020, the Sensex and Nifty were down 15%.
Despite the covid crisis deteriorating in India, especially in the past few months, and delayed economic recovery due to localized lockdowns, investors continued to pump money into equities, making it the best-performing asset class in the first six months.
“The ongoing bull market compares well with history. If this bull market is reminiscent of that in 2003-08, as we think (considering a likely fresh earnings cycle), it has more legs to it. India has outperformed EMs in each of the previous five bull markets with an average outperformance of 52% versus 23% for this bull market. We expect India to continue to outperform EMs in the coming months,” said Morgan Stanley.
Morgan Stanley’s definition of a bull market is when an index (the BSE Sensex) doubles from its trough. India has so far had six bull markets over the past three decades.
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