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Thursday, December 1, 2022

Why is the Sensex in the green while other major global indices are in the red?

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

 

MUMBAI:The sensex is currently the world's best-performing major index in 2022, having gained more than 8% year to date.The majority of global indices are deep in the red, so the increase stands out starkly.The investing community was first hit hard by skyrocketing commodity prices brought on by the war between Russia and Ukraine. Then came rapid increases in interest rates that have put many economies on the verge of going into recession.


The sensex was also affected by global woes, falling nearly 12 percent year-to-date to 51,360 on June 17, the year's low.However, it has since increased by 19% to reach 63,000 on Wednesday.


In contrast, the US Dow Jones has lost nearly 7% year-to-date, the S&P 500 has lost 17%, and the tech-heavy Nasdaq has lost 30%.The year-to-date declines of Japan's Nikkei and Hong Kong's Hang Seng are shown in the graph.


All in all, why would that be a bullish pattern on Dalal Road when most other significant business sectors are still in the hold of bears?Market participants claim that despite external turmoil, Indian stocks have outperformed global ones due to relatively stable macroeconomic conditions.According to market analysts, steady economic growth is likely due to rising capital expenditure, credit demand, and lower inflation.


"India seems to be growing at a time when most economies are sleeping, like an oasis in the desert.Lakshmi Iyer, CEO (investment advisory), Kotak Investment Advisors, stated, "Corporate India has also demonstrated resilience in the post-pandemic phase."


India is also benefiting from China's "Covid-Zero" policy and crackdown on influential tech titans, according to market participants.For those who invest in Chinese stocks, the wall of trust is coming down.As a result, India gains from a decrease in China's weight in the MSCI (index), according to Basant Maheshwari of Basant Maheshwari Wealth Advisers.


According to S Ranganathan of LKP Securities, access to resources like coal has partially protected earnings for certain industries from the rise in global energy prices.He added that India Inc. was also helped by a normal monsoon season.


As a result of China's stringent Covid restrictions, prices of raw materials like rubber, which had increased in the first half of the year, are also decreasing globally.According to Motilal Oswal Financial Services' Siddhartha Khemka, "Our oil-import dependent economy will greatly benefit from the drop in oil prices to around $80 per barrel."


Market participants stated that Indian stocks have risen as a result of rising SIP contributions and buying by domestic institutional investors despite a year-end selloff by foreign funds of nearly Rs 1.3 billion.According to V K Vijayakumar, chief investment strategist at Geojit Financial Services, "foreign investors who have largely missed out on this rally have begun to provide strong support for the markets right now."According to CDSL and BSE data, foreign investors purchased Indian stocks in November for slightly more than Rs 45,000.

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