India next only to Vietnam in poor market performance
As volatility continues to plague the emerging markets, India has been the worst performer after Vietnam this year. The US credit crisis and fears of a recession in the world's largest economy is compelling the foreign funds to dump stocks.
Data by Bloomberg shows the drop in Nifty in this calendar year was 17.29 per cent, second only to Vietnam's Ho Chi Minh Stock Index, which shed 25.40 per cent.
The Chinese market was the third worst performer, with the Shanghai Composite shedding 17.12 per cent. The 30-share Sensex was the fifth worst in the region, declining by 15.23 per cent.
The widespread fall is a major reversal from the bull rally prevailing till December 2007. The average growth in these markets was 44.65 per cent.
The Indian market rose by 47.15 per cent, next only to China which registered a growth of 96.66 per cent. The Brazilian market went up by 43.65 per cent, while Russia and Singapore stood at 19.18 per cent and 16.63 per cent respectively.
Among the regional markets, only Indonesia (up 0.35 per cent) and Pakistan (up 12.19 per cent) have ended in the positive this year.
The performance of Indian markets during last year's bull run was at par with the regional peers, but the slump has been more than average.
According to Sanjay Sinha, CIO, SBI Funds Management, the growing interest rate differential has led to volatility in the Indian markets.
"Financial markets are interlinked. There are many uncertainties, both global and local. The RBI has kept the rates unchanged due to inflationary pressures and liquidity management concerns, whereas US has been cutting rates aggressively. Amid the lower GDP estimates, slower credit growth, moderation of industrial production and the growing interest rate differential, there is a pressure on the regulator to cut rates," he explained.
Similarly, Arindam Ghosh, CEO of Mirae Asset Global Investment Management (India), conceded that the global markets did have an impact. "Volatility will be a major concern in 2008 as the markets are coupled," he said.
Ghosh expressed confidence that the Indian market, given its diversified nature, would absorb the pain, while maintaining that the interest rates must come down.
"Headline inflation and rising rates are the major constraints towards growth. Once these come down, growth would not be a problem," he told Business Standard.
Corrections were needed, according to experts, as the market was overvalued. "Market turmoil is a result of the global factors. But the India growth story is on," Ghosh said.
Market was overvalued at 21,000. So correction was always on the cards.
As volatility continues to plague the emerging markets, India has been the worst performer after Vietnam this year. The US credit crisis and fears of a recession in the world's largest economy is compelling the foreign funds to dump stocks.
Data by Bloomberg shows the drop in Nifty in this calendar year was 17.29 per cent, second only to Vietnam's Ho Chi Minh Stock Index, which shed 25.40 per cent.
The Chinese market was the third worst performer, with the Shanghai Composite shedding 17.12 per cent. The 30-share Sensex was the fifth worst in the region, declining by 15.23 per cent.
The widespread fall is a major reversal from the bull rally prevailing till December 2007. The average growth in these markets was 44.65 per cent.
The Indian market rose by 47.15 per cent, next only to China which registered a growth of 96.66 per cent. The Brazilian market went up by 43.65 per cent, while Russia and Singapore stood at 19.18 per cent and 16.63 per cent respectively.
Among the regional markets, only Indonesia (up 0.35 per cent) and Pakistan (up 12.19 per cent) have ended in the positive this year.
The performance of Indian markets during last year's bull run was at par with the regional peers, but the slump has been more than average.
According to Sanjay Sinha, CIO, SBI Funds Management, the growing interest rate differential has led to volatility in the Indian markets.
"Financial markets are interlinked. There are many uncertainties, both global and local. The RBI has kept the rates unchanged due to inflationary pressures and liquidity management concerns, whereas US has been cutting rates aggressively. Amid the lower GDP estimates, slower credit growth, moderation of industrial production and the growing interest rate differential, there is a pressure on the regulator to cut rates," he explained.
Similarly, Arindam Ghosh, CEO of Mirae Asset Global Investment Management (India), conceded that the global markets did have an impact. "Volatility will be a major concern in 2008 as the markets are coupled," he said.
Ghosh expressed confidence that the Indian market, given its diversified nature, would absorb the pain, while maintaining that the interest rates must come down.
"Headline inflation and rising rates are the major constraints towards growth. Once these come down, growth would not be a problem," he told Business Standard.
Corrections were needed, according to experts, as the market was overvalued. "Market turmoil is a result of the global factors. But the India growth story is on," Ghosh said.
Market was overvalued at 21,000. So correction was always on the cards.
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