SENSEX Outperforms Asian Peers as Confidence Returns

Benchmark Indian indices have outperformed their Asian peers like Shanghai Composite SE (China), KOSPI (South Korea), Strait Times (Singapore, etc. Even when compared with Dow and Nikkei, the Sensex has fared better. The gap in valuations has narrowed down with its emerging market peers, while the same widened for developed market peers.

The trend reflects the growing investor confidence, and analysts feel, if the Sensex continues to outperform Asian peers, it may soon become the biggest index in the continent.

Analysts feel a higher level of confidence in the Indian market compared with other global markets has enabled the Sensex see a smart recovery. VVLN Sastry of Firstcall India Equity Advisors says, "Among emerging markets, the foreign investors have more faith in the strength of Indian market compared with the Chinese market and as a result, have given it a higher rating."

Interestingly, Indian indices' main rivals, the Chiinese indices, are month the worst performers. China has been, of late, facing the problem of overcapacity. As many facilities are being shut down in the absence of proper demand, foreign investors are cautious in making fresh investments. They also fear artificial weakening of the Chinese currency yuan. Mr. Sastry said, "Fear of any sudden fall in the yuan has decreased the inflow of foreign investment in china in the recent months."

Source: September 23, 2009 Economic Times, India.

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- Sanjeet Parab

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