Sensex 2 Month Rally Setting Up Potential Fall

Indian equities have had a stellar run over the past two months, recently rising to a three-year high, but analysts warn that the market rally is ripe with risks.

“Investors ought to be cautious on India. The economy will continue to suffer from a poor growth-inflation mix, leading to a high cost of capital,” said Nicholas Ferres, investment director at Eastspring Investments.

“In this context, the valuation multiple for the market does not provide sufficient compensation for risk, in my view,” he added. The benchmark S&P BSE Sensex is trading at a price-to-earnings ratio of 16.8.

Indian shares have surged around 13 percent since the U.S. Federal Reserve’s decision to delay tapering its $85-billion-a-month asset-purchase program in late August, driven by robust inflows from foreign investors.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu