India Stock Market Continues to Rise Against Falling Global Tide

As the global markets flopped at the end of last week under the repeated threat of the Federal Reserve removing its support for the US economy, one market decided to go the other way – India.

The fact that the BSE index, or Sensex, often ignores global equity trends is not the point. In fact the last time the Fed looked as though it was going to “taper” off its $82bn (£59bn) quantitative easing programme Indian stocks were knocked sideways along with every other emerging market and the rupee collapsed.

By September it had fallen 20% since the beginning of the year to an all-time low against the dollar. The reasons were threefold – an escalating current account deficit, a too-big budget deficit and the prospect of foreign money being sucked back to the US as interest rates there started to move back up.

Foreign investors
So what has changed, and why has the prospect of “tapering” not created a rerun of what happened in September?

Instead foreign investors seem to be content to hang in there – the rupee hit a five-week high on Thursday and the stock market is flirting once more with all-time highs.

If there is one event that changed sentiment it has to have been the appointment of Raghuram Rajan, as governor of the central bank, the Reserve Bank of India (RBI).

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza