In one minute, India best mkt in world with 48% gain in ’09

19 May 2009,

CHENNAI: The 2111-point surge on 'Magnificent' Monday pushed the Indian stock market ahead of competition as the best performing market across the world, giving investors an astounding 48% gains in 2009.

With factors like the government's stability and the Left's fate settled, investors furiously bought index constituents in the 30-share BSE sensex, keeping the 'India story' alive and kicking.

From sub-10,000 point levels at the end of 2008, the Indian benchmark has gained over 4,600 points in less than six months — thanks to the rally that started from early March.

Before Monday, sensex had gained 26% in 2009 but the two minute bull blitz leading to the unprecedented over 2,000-point gain turned out to be the game-changer for the open slot of the best performing market this year. Marketmen expect India to turn into one of the lowest risk, highest growth investment destination globally.

India could outperform emerging markets (EMs) in the coming 12-months especially if the government delivers on the policy front, said Ridham Desai of Morgan Stanley. He has an year-end target of 15,300 for sensex.

"Global investors will be chasing outperformance and Indian economy can offer them the best chance with 7-8% GDP growth in the next few years. While investors were earlier chasing value, now they will be chasing growth. The mindset has changed and there is lot of money waiting to come into India," said Seturam Iyer, chief investment officer at Shinsei AMC.

With political risk less of an issue, Indian stock market — still under owned by FIIs — is being re-rated. With the re-rating process still unfinished, many expect India to continue to outperform other countries like China, Brazil, Taiwan, Russia and Vietnam.

In terms of year-to-date performance, India's sensex is followed by China's Shanghai SE A-Share index with 45.6% gains, Taiwan's TAIEX (up 43.3%), Russia's RTS-2 (33.2% gain) and Indonesia's Jakarta Composite (up 31.2%), Bloomberg data shows.

Even if equity markets head lower sharply later in the year, $10-15 billion of capital may be transferred from global financial investors to Indian corporates and their major shareholders before that, Credit Suisse analyst Nilesh Jasani said.

While some experts feel that there could some consolidation before the market moves on, analysts at Credit Suisse believe that Indian stock market could overshoot considerably, global markets permitting, from pre-budget period to July.

With investors in stock markets in developed nations such as Australia, France, the US, the UK and even Switzerland registering 1-6% losses or at best, flat gains in 2009, experts believe India's outperformance will bring in more FIIs, hedge funds and big institutional investors.