Niftybank vs S&P500
Nifty50 vs S&P500
NiftyIT vs Nasdaq 100
Outperformance of Indian indices are evident. According to you what is contributing to this divergence??
PS: its not fair to compare banknifty vs SPX but i kept it as most traders prefer BN
For comparison purpose I feel we should convert one to another currency.
So nifty should be converted in USD terms.
create the same visualizations corrected for USD… these are free markets so always compare in same currency.
@Jason_Castelino @ranton137 - yeah converting to USD has brought down the divergence
so the USDINR appreciation has a big part to play in the valuations of our stock indices?
BN vs SP500 is not a good comparison obviously but others are close. And if you exclude the effect of RBI’s attempt of stabilizing the USDINR that also becomes very small.
There might be multiple POV’s on this and I can do a complete write up of my POV but I would suggest to read about CAPM in the fundamental sense. And how the capital providers expected rate of return is dependant on risk free rate and the “riskiness” beta of the asset he is investing in. And in free markets where curriencies can flow from one area to other with almost negligible expense capital providers i.e. investors should consider in same currency and currency effects are handled to an extent directly on the CAPM calculation.
PS - I dont know what ur background is but if this seems too confusing to understand just ask ELI5 Version of CAPM to ChatGPT.
I would say this is because of the rise of DIIs and their confidence in Indian growth story. While FIIs kept selling this FY, DIIs kept on buying. We have a fairly young population, huge market because of the population size and after years of coalition govts we have a majority political setup which is not strangled by allies when it comes to reform measures.
FIIs monthly
DIIs monthly
Obviously it will. Interest rates play a huge role in determining required rate of return to the investors. Higher interest rates leads to currency depreciation also. It’s all linked.
One more factor which plays an important role is the implicit risk. When the risk associated is more, investor demand higher return too.
These two are theoretical and part of fundamentals.
In addition to this it’s all about demand and supply. That can come because of different reason.
Our broader markets have taken a hit from last year and indices are doing fairly good as we are getting more consistent flows into them via SIPs and even fundamentally, we are witnessing formalization of the economy.
Thanks to the Adani saga and China’s reopening, We have actually underperformed in the last 6 months
So there is a catch then
people who are investing in US believing they are bottom fishing are getting fooled.
Due to currency devaluation, if indian stock markets are inflated then buying USD stocks with INR doesnt make sense.
It’s the other way round. If you get 5 percent in US market it might be better than 8 prevent in Indian market.
It all depends on interest rates. Search for interest rate parity theorem. You will get better understanding.
Capital market returns are at high level= Growth( Productivity ) + Interest rate
yeah thats true if the INR continues to depreciate. What will happen if it appreciates?
As long as our interest rates are higher than that in US, theoretically we can’t appreciate.
okay thats a new info for me, will research on it - looks like an "interest"ing subject 
INR will never appreciate against USD. This has got lot to do with energy and oil imports. Most oil is priced in dollars(petro dollar, opec) and we are the third largest oil importer in the world along with rising private vehicle ownership, so trade deficits only get wider and wider and even becomes wider when oil barrel price rises high. The govt can not discourage private vehicle ownership via taxes because that takes away jobs. Hydrogen energy nd alternative sources of energy all are 150 to 200 years away. Till then INR will depreciate against USD only!
Why can’t Government tax private vehicles use those proceeds to build Public transport. Then the job losses of Automotive sector will be compensated by creation of new jobs from Public transport sector like Metro coach manufacturing/maintainemce, drivers, ticketing staff etc.
what taxes are you guys referring to?
Road tax or manufacturing tax?
By government, you mean central?
Job creation is also in the hands of state governments, and not every city and town cannot be connected to railways, so this may not work.
And there is a lot of workforce in vehicle business, as you know.
As some guy that owns a car and a bike that pays way too much indirect tax via petrol & Diesel, this has got to be the most socialist thing too say 
. Just saying for fun 
Believe me or not, they actually did this. These are socialist & communist policies what you are saying, govt had enough experience, so much experience that 1991 crisis happened solely because of this, that planning commission is not going to go back on this irrespective of party in power. Because socialism & communism don’t really work!
From organization perspective there is too much politics, I mean politicians and bureaucrats that have no relevance to bussiness has too much power and will screw up bussiness. I remember a time where senior manager from air india was saying he had a tough time of keeping aircraft at gate with passengers because the local MP got late to airport by hour and that flight was literally delayed by an hour, there are issues like parliament members won’t pay up cuz it’s govt, funds won’t come , over spending, prathiba Patil took an entire village for free all paid by air india, all crazy stuff happens in PSU. You will find majority of PSU’s that don’t have monopoly are loss making, referring to railways & air india. So govt resorts to printing money which screws ppl with inflation.
From employee perspective it’s quite true you can create lot of jobs but they are not going to be satisfied, there would be no growth, slow promotions that quality of services will always be worse. You need free Market capitalism for market forces to naturally force people & organization to be competitive and productive
The only fix for this one we have big population, so we can produce bio gas at large quantities. Its easy to produce too and creates job irrespective of where people are there. Then find relevant technology like biogas engines for car, bike, truck and slowly phase them.
