India shrugs off global market cues

Aided by some robust buying by domestic institutions, Indian stock markets have been showing signs of independence from global trends.

Indian stock market indices have climbed close to their all-time highs, even as key overseas indices such as the Dow Jones, FTSE 100 and Nikkei 225 are reeling under the sub-prime meltdown in the US.

While the Dow has fallen 4.40 per cent, the FTSE 4.73 per cent and the Nikkei 12.43 per cent since July 24, when the markets felt the first tremors of the crisis, the BSE Sensex has softened just 1.25 per cent.

Today also, most Asian market indices, except the Hang Seng and Shanghai, reacted sharply to Friday's reports of poor jobs data in the US and ended the day in the red.

The Sensex too initially lost 227 points but recovered immediately and ended the day up 0.04 per cent to 15,596.83 points. The Dow was 52 points down at the time of going to press on Monday, while the FTSE 100 had lost 57.1 points.

Stock market experts said this was a clear indication that the Indian markets had de-coupled from the western markets and had a destiny of their own.

Ravi Kapoor, managing director and head of equity capital markets with Citigroup Global Markets India, said: "We believe, once the sub-prime c risis is managed, the fundamentals of the Indian economy and the performance of Indian companies will get appropriately noticed and valued."

Data released last week by the government had said that the economy grew 9.3 per cent in the first quarter (April-June) of current fiscal. In addition, inflation has fallen to below 4 per cent and latest trade data showed that exports continued to rise in July, notwithstanding the strengthening of the rupee vis-à-vis the dollar.

Studies have also suggested that the mortgage market in the country, including the sub-prime market, continues to be in robust health.

In August, foreign institutional investors (FIIs) sold equities worth more than $2 billion, while domestic institutions stepped up buying. Clearly, the domestic institutions continue to bet on the India growth story, even if the FIIs are not buying.

"Earlier, the sentiment was bad, which sucked out the liquidity. With the corporate earnings season set to begin, the impact will unfold now," said Seshadri Bharathan, director (stock broking), Dawnay Day AV Securities.