Why Indian Indices performed better than the US and other emerging market indices

I was just a beginner in the stock market when the market crashed. In my last story, I told you about my beginning in the world of stocks. In October 2019, I became eligible and just after 6 months, one of the worst crashes happened since the 2008 financial crisis when the pandemic hit the world.

Why did the market crash?

There is always a trend when the market crashes after a long period of bull run and when the market starts getting tired, then it only needs one stimulation to become a bear market.

The economy was already slowing down since 2019, and many great investors have predicted the crash, but they didn't expect the reason will be the pandemic.

Nexus between Stock Markets

I follow both Wall Street (USA) and Dalal Street (India). There is a saying that the stock markets are linked to each other and if one country's stock market is struggling, the rest also follows them.

Wall Street is more important because usually other markets follow its trend, though this has been changing since the pandemic, as Dalal Street has given a more handsome return than Wall Street.

Chart of different markets

1. Dow Jones Industrial Average:

2. Sensex

Why Indian Indices has given more handsome returns?

You can analyze from the above charts that the Indian Indices has given two times more returns than the US Indices.

You may be wondering why an emerging economy is getting more investors than a developed economy.

This may be because there is currently a very stable and reliable government in India, with the most popular Prime Minister. I applaud the government because a foreign investor always looks at government initiatives before investing in that country.

India receives highest FII inflows among emerging markets in 2020

This shows that investors are having faith in the Indian Economy and that is the reason the Indian Indices outperform the US and other world indices.

Approaching Pandemic

Many thought that the pandemic will be fatal for everyone, especially in India, where the population is more than 1.3 Billion and with democracy.

Everyone knows how tough it is to make decisions when there is a democracy, especially in the parliamentary democracy where we have to take everyone's opinion.

But still, India emerges as a strong economy with their people having faith in their country and that is the reason India survives this fatal pandemic.

Emerging Start-ups

India has become a hub of new start-ups, with daily a new company listed on the Stock Market.

In terms of entrepreneurship and business, India has evolved into one of the top emerging countries in the world.

Hundreds of startup companies have been founded there in the last years, many of which are enjoying incredible success.

With the forthcoming IPO of beauty and fashion major Nykaa slated to raise over Rs 5,350 crore (~$718 Million), the cumulative quantum of fundraising would cross the Rs 70,000 crore (~$9 Billion) mark for the first time ever in any single calendar year.

With the profitable listing of Zomato, Paytm, Nykaa, and many other unicorn startups, India has given a clear message that it has great potential to become a Start-up Hub.

What's next for Indian Indices?

According to Business Standard, Fitch Ratings has retained India's ratings at the lowest investment grade and outlook on them at negative due to high debt and limited fiscal headroom of the central and the state governments.

The move on the outlook is in contrast to that of Moody's Investor's Service, which recently upgraded the outlook to stable from negative.

This is true that Indian Indices has now come to the level of extreme greed and I also don't recommend investing in Indian Indices right now.

But I believe in the Indian Economy, not because of my nationality, but because I have faith that the Indian people and companies, and soon it will overcome China to become the 2nd largest economy.

NAMASTE