Sensex has risen 87 per cent in the current Samvat so far.
Samvat 2065, to end in the next 10 days, is proving to be quite prosperous for equity investors as it has given the highest returns for any such year in recent times.
Samvat 2065 (named after king Vikramaditya) gave the best returns in all years since 1991 from when data are available. Even veterans say they don’t remember if the equity market has ever given higher returns than this year.
The Sensex has risen 87 per cent in the current Samvat year so far. In Samvat 2064, the Sensex was down by 52.4 per cent. Only thrice since 1991 has the Sensex given returns of over 60 per cent — in 2006, 2003 and 1999.
World over, though, others did better. Jakarta gave 123.65 per cent returns during the period, while Brazil’s market gave 87.6 per cent. In market capitalisation, Brazil is marginally ahead of India, while Jakarta is much smaller.
The rebound after stock markets corrected in the wake of the global financial crisis has been led by a strong flow of foreign and local institutional money. Apart from a low base, the reason for the current rally in the Indian market is high potential for growth and a strengthening currency.
Most markets bottomed out in the second week of March 2009. The Sensex has doubled since them. The dollar reached a historical peak of Rs.51.97 during the period and is today trading at Rs.46.34, an almost 10.83 per cent appreciation for the Indian currency.
| CURRENCY PER DOLLAR | ||
| Asia | Oct 8, ‘09 | % chg for last Samvat |
| Jakarta Composite | 2484.52 | 123.55 |
| Hang Seng | 21492.90 | 70.63 |
| Taiwan Taiex | 7503.31 | 70.53 |
| Kospi | 1615.46 | 61.68 |
| Straits Times | 2650.95 | 59.07 |
| Shanghai se Comp | 2779.43 | 56.87 |
| Nikkei 225 | 9832.47 | 29.00 |
| Others | ||
| Brazil Bovespa* | 62638.28 | 87.61 |
| FTSE 100 # | 5136.28 | 30.81 |
| Nasdaq Comp* | 2110.33 | 27.94 |
| Dow Jones* | 9725.58 | 7.29 |
|
#Till 1730 IST *as on 07/10/2009
| ||
|
Aug 8, ‘09
|
% chg from last Samvat |
% chg from Mar low |
|
USD 46.34 |
7.08 |
10.83 |
“A strengthening currency helps import-dependent economies like India and that attracts more foreign funds as risk reduces, which is what is happening in India,” said Jigar Shah, senior vice-president and head of research, Kim Eng India Securities, one of the leading foreign brokerage houses.
He believes most of the foreign money is coming from stable long-term investors and hedge fund activities have generally come down after last year’s crisis in financial markets. However, some also say that a part of the inflows is led by the dollar carry-trade. Interest rates in the US are at an ebb and borrowing in dollars and putting that money in emerging markets can give high returns, leading some hedge funds to tap this route.
The rally in 2007 in the Indian market was also fuelled by the rise of the rupee against the dollar. This is because whenever a currency appreciates, assets held by foreign investors appreciate in terms of the home currency, even if the market is stable.
Dharmesh Mehta, head, Equities, Enam Securities, had said he expected around last year’s Diwali that the Sensex would reach 15,000 but “the rally is surprisingly better, despite the fact that a majority of the reforms the Indian government has talked about are yet to materialise...markets will need support from the government via pending reforms and big spending on infrastructure and power to maintain the current rally.”
