By In a turbulent global economic landscape, India’s equity markets are emerging as a beacon of resilience.
While Donald Trump’s re-election has sparked a rally in US stocks, most major global markets in Europe, Asia, and the Middle East are grappling with declines.
Against this backdrop, India’s markets stand strong, delivering near-flat returns in dollar terms and underscoring their relative stability amid global uncertainty.
India’s resilience amid global declines
India’s benchmark indices, the Sensex and Nifty 50, have shown remarkable stability in November.
The Sensex edged up 0.62%, while the Nifty 50 declined marginally by 0.15% in dollar terms.
This performance positions India as the most resilient major market outside the US. In contrast, key global indices have faced steep losses.
France’s CAC 40 has plunged 5.7%, Germany’s DAX is down 2.1%, and Japan’s Nikkei has dropped 1.53%.
Asian markets, including the Philippines’ PSEi (-7.74%) and Indonesia’s Jakarta Composite (-5.66%), have been hit harder, highlighting the relative strength of India’s markets.
In the US, however, equity markets are thriving.
Optimism surrounding Trump’s second term and expectations of pro-growth policies have propelled the Dow Jones up 7.1%, the S&P 500 by 5.1%, and the NASDAQ by 5.33% in November.
What’s driving India’s market strength?
India’s resilience stems from robust domestic institutional investor (DII) inflows and improving market sentiment. DIIs have poured over ₹4.5 lakh crore into equities in 2024, offsetting the impact of significant foreign portfolio investor (FPI) outflows.
“India is in a sweet spot under President Trump,” Ritesh Jain, founder of Pinetree Macro, was quoted as saying by Moneycontrol.
“The markets had already corrected in October, and what we’re witnessing now is stabilisation.”
Investor confidence is also buoyed by the BJP’s recent electoral victory in Maharashtra and optimism for stronger corporate earnings in FY25.
US markets roar as global pressures rise
Trump’s re-election has fueled a rally in US equities, driven by expectations of tax cuts, tariff barriers, and pro-business policies.
The dollar index has surged 3% as foreign investors flock to the safety of US assets, supported by the Federal Reserve’s easing monetary policy.
“This preemptive ‘Santa Claus Rally’ reflects investor confidence ahead of Trump’s inauguration,” noted Apurva Sheth, Head of Market Perspectives at SAMCO Securities.
However, global markets are reeling under the weight of these developments. Europe struggles with deteriorating economic data, while Asia faces sluggish growth and mounting trade uncertainties.
The stronger dollar and aggressive US trade policies under Trump have exacerbated challenges for these regions.
India’s edge in a divided world
India’s unique positioning amid global volatility sets it apart.
While markets across Europe and Asia brace for further challenges, India’s steady domestic inflows and improving valuations provide a solid foundation for growth.
Source: Moneycontrol
The Nifty 50, trading at a forward valuation of 19.1x one-year earnings, remains below its historical average, creating an attractive entry point for investors.
“Trump’s re-election is perceived negatively for regions like Japan, Europe, and China, while India’s relative stability is drawing attention,” said Jain of Pinetree Macro.
As global markets navigate the uncertainties of Trump’s presidency, India’s equity markets continue to showcase their resilience.
Buoyed by domestic investments, improving sentiment, and attractive valuations, India is carving out a unique narrative of stability in an otherwise divided world.
Investors seeking growth amid global turmoil may find India’s markets a compelling opportunity.
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