India No 2 among emerging markets

MUMBAI: Thanks to a global liquidity glut, the Indian equity market is soaring along with the rest of the emerging markets. Even as the benchmark Bombay Stock Exchange (BSE) Sensex recorded yet another high on Monday, other world markets have also reported a smart rise, data show.

The Morgan Stanley Emerging Market index, the benchmark used by most international fund managers, gained 8.05% in the month to date (MTD) and 23.05% in the year to date (YTD).

In the same period, the developed markets world index gained 4.14% and 6.33% and the emerging market (EM) Asia index recorded gains of 7.98% and 14.43%, respectively.

The MSCI India index has recorded one of the smartest rises over the last one month, gaining 10.66% MTD and 24.54% YTD.

India's performance was second highest in emerging Asia after Philippines over the month.

This has come on the back of renewed foreign fund buying after a slump in October that led to a mini market crash, analysts said.

An analyst from a foreign broking house, who services numerous foreign investors worldwide, says that in a changing world investment scenario, global investors are looking to buy assets in countries which were considered unviable only a few years back.

Demographic disadvantages and the need to generate higher returns for paying out pensions to ageing populations in their own countries had forced many of them to look at markets like India which have a thriving economy.

Large funds from the US, Europe,  Japan and other developed countries will continue to hedge their investments in markets like India to improve returns, he added. 

The biggest gainer in EM Asia was Philippines, up 11.05% MTD, followed by India (10.66%). China gained 7.66%. Colombia recorded the biggest rise of 20.54% MTD in emerging markets the world over. The biggest loser among emerging markets was Sri Lanka, down 11.58%.

Several Asian markets are on a high on the back of strong buying in underlying stocks.

Analysts said that many Asian stocks have hit their five-year highs in recent times on the back of a similar high in sales, especially retail, at the start of the holiday shopping season.

Reports suggest that exports are expected to rise fears of a sudden slowdown in the US economy seem to be unfounded as of now, they added. 

New avenues

MSCI emerging market index up 8% in a month

Year-to-date gains are well over 23%

Developed markets show much slower growth