Despite the Russia-Ukraine war, huge wave of foreign selling, monetary tightening, high valuations, energy crisis, supply chain disruptions, Inflation, rise in gas price and rise in oil price, the Indian market is just a few points away from its all-time high. The Indian investors resilience is remarkable. Despite everything thrown at it, the strong core foundation of the Indian market remains intact.
As we all are aware, the Nifty 50 index in the Indian stock market represents the 50 blue chip companies of India. In the Covid struck pandemic year 2020, Nifty earnings were up by nearly 18-19%. In 2021-2022, the nifty earnings were up by 48-49%. This shows that the Indian market is very structured and rational. In the past, foreign investors were seen as the only drivers of any rally in the Indian stock market. It is now noticed that the Indian stock market has also become ‘Aatmanirbhar’. The domestic and the retail investors are resilient enough and they are 100% capable of running a bull run without the support of the foreign investors and institutions. Due to the recent weak global cues, many foreign investors and institutions have offloaded shares in extremely massive quantities. DESPITE that, the Indian markets have stayed resilient.
**Figure below shows the GDP growth of India over the years. You can see that even though the GDP went down during the pandemic lockdown year, it bounced back exemplarily. It is almost at its all time high now.**
A report by Morgan Stanley stated that India is most likely to be the fastest growing Asian economy in the coming years. Another big reason for India’s resilience is that India has much lower debt in the economy as compared to the rest of the world. India’s population is a lot and while this factor has many negatives it also has positives. More population means more workforce. More workforce means more efficiency. More efficiency means more economic growth and advancement.
The Indian government is also continuously making remarkable efforts to control the corruption in India , this is also another reason for the growth of the Indian economy. India is extremely robust and resilient. The privatisation of various goods and the introduction Goods and services tax has made the economy grow on an even larger pace. Ending of work from home policy in India and lifting pandemic curbs contributed to the momentum. Also, India has taken over the UK’s position in the list of the world’s largest economies. If we look into the historical records, we will notice that India had bounced back pretty well after every US recession.
Global cues are currently negative and the indicators presently show that there might be a downfall for a bit in the Indian economy and the stock market. The global recession concerns and the inflation hikes abroad might affect the Indian stock market. But that would just be a short term temporary setback because the core strength of the Indian economy is remarkable. The Indian stock market always has and always will recover and bounce back better than ever before and continue to reach greater heights creating newer all time highs.
Sowmya Sasun
Source: MorganStanley.com,NSE,BSE,Worldbank