Sharp outperformance of Indian markets over EMs, world continues

Leads to surge in valuation premium; Experts caution investors

Most global markets often march in lockstep. However, what has played out this year—more so since August—has stunned many on the Street. The Indian market has stolen a march over its emerging market (EM) and world peers. For a second straight month, the Nifty has outperformed the MSCI World index by more than 6 percentage point (ppt), while the MSCI EM for a fifth straight month.

China’s equity market correction due to the regulatory crackdown has weighed on the performance MSCI EM index—where it has more than a third of weightage. The MSCI World index is dominated by developed world