news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

driven by the optimistic economic outlook and the fed's interest rate cut, foreign capital continued to flow into the indian stock market. the benchmark nifty 50 index broke through the 26,000 mark on tuesday, setting a new record high. by the beginning of the year, the nifty 50 index has risen by nearly 18%.

despite the disappointing results of the indian general election, the escalation of global geopolitical tensions, and the disappointing capital gains tax plan announced by the new government, the growth momentum of the indian economy is still generally optimistic. the international monetary fund (imf) previously predicted that by 2028, india will become the world's third largest economy.

meanwhile, morgan stanley’s recent august quarterly review showed that india’s equity weighting in the msci emerging markets index jumped to 19.8%, the highest level ever, from 18.8% in may.

morgan stanley said that the increase in index weighting could be a sign that india's stock market is maintaining its upward trend, and fundamental factors such as improved float and rising relative returns of indian listed companies may also be driving factors.

coupled with the stimulus of the federal reserve's substantial interest rate cut, foreign investment enthusiasm peaked last week.

according to the latest statistics from the agency, as of last friday, the value of indian stock-related derivatives held by foreign institutional investors reached a record high of 9.7 trillion rupees (about 116 billion u.s. dollars). among them, the bullish contracts of indian index futures increased to more than 500,000, especially futures related to the nifty 50 index. overall, foreign investors' bullish exposure to indian stock market derivatives hit the highest level since 2015.

some analysts believe that after a period of stagnation, the indian stock market is still expected to rise for the sixth consecutive quarter, and september may become the best month for capital inflows in the past six months.

bloomberg data shows that net foreign purchases of indian stocks have reached $8.5 billion this quarter, which is expected to be the highest level since mid-2023.

"these are the latest signs that foreign investors are taking a positive view on the indian market and this trend is expected to continue for some time," said anuj dixit, executive vice president of equities at indian investment firm sovereign global.

however, high valuations are bound to bring high risks. the price-to-earnings ratio of the indian stock market is already twice that of the msci emerging markets index.

according to bloomberg data, the nifty 50 is now trading at 25.5 times earnings and 23 times earnings for the next 12 months.

hsbc previously stated that the indian stock market is currently hot, but there are still ten risk factors, such as slowing corporate profits, difficulties for banks to absorb deposits, sluggish capital expenditure in the private sector, and weak and concentrated foreign investment.

taking corporate earnings as an example, the attractiveness of the indian stock market depends largely on the continued strong growth in earnings. hsbc pointed out that the performance of indian companies in the second quarter was worrying, with earnings growing at a double-digit rate, unlike the high growth in the past few years.