The total market capitalization of the National Stock Exchange of India is over $5.
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Indian nifty 50 perform better than S&P 500 Index Analysts told CNBC the index could move higher this year.
The South Asia benchmark has surged 11.8% so far this year, outpacing the S&P 500’s 9% gain, and topped the 25,000-point mark for the first time last week.
Traders are increasingly expecting the Federal Reserve to cut interest rates in September, an environment that could boost Indian stocks. A U.S. interest rate cut will give the Reserve Bank of India more flexibility to start monetary easing as a weaker dollar pushes up the rupee and lowers global borrowing costs.
Ayush Babel, global associate director of quantitative research at WisdomTree, explained: “Indian companies with dollar-denominated debt will benefit from reduced interest expenses, improving profitability and making stocks more attractive to investors.
India’s Nifty 50 outperforms S&P 500 so far this year
To be sure, global stocks tumbled on Monday after a disappointing U.S. jobs report reignited fears of a recession. Japan’s Nikkei 225 index plunged 12.4% on Monday, its worst trading day since the Black Monday crash in 1987, while the Nifty 50 index fell just 2.7%.
Malcolm Dorson, senior portfolio manager of Global X ETF, said there are two main reasons why Indian stocks have outperformed their regional peers.
“India’s growth is less dependent on U.S. demand than countries like Taiwan and China. Second, India remains generally underinvested by international investors. It’s a well-known story, but one that many investors have been waiting for This could be a window for the stock market to fall,” Dotson told CNBC.
Babel predicts: “With continued momentum and a favorable macro environment, India is expected to achieve further growth of 5%-15% this year.”
Babel said, “The psychological 25,000 mark acts as a momentum catalyst as round numbers tend to attract market attention. Notably, the Nifty 50 surged from 20,000 to 25,000 in just 220 trading days, making it history. Fastest rebound to 5,000 points.
Last Wednesday, the BSE Sensex index also crossed the 80,000-point mark for the first time.
undying optimism
Prime Minister Narendra Modi’s pledge to make India the most powerful country in the world also supports this optimism. It will become the world’s third largest economy by 2030 and a developed country by 2047.
The world’s most populous country is also striving to become Asia’s manufacturing powerhouse.
WisdomTree’s Babel said: “As investments in Indian manufacturing grow exponentially, foreign investors are increasingly interested. Global supply chains are considering manufacturing in India to offset geopolitical risks, especially between China and the United States. This is further supported by the fact that there are tensions.
this Financial Times reported in December Apple has told parts suppliers that it will source batteries for its upcoming iPhone 16 from factories in India.
Apple supplier Foxconn has announced it will increase investment in India, while Micron Technology plans to produce its first Indian-made semiconductor chips in early 2025.
“Global investors are realizing that India is not just a blip but an opportunity to deliver compound returns above the cost of capital for their children and grandchildren,” Global X’s Dolson said.
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