India decouples from global capital market: Is it a surprising move?

The global capital market experts find it surprising. They say Indian decoupling from global capital market is kind of unexpected.

They say India is pretty much attractive for global investment now due to its ‘visibility for high growth’. And then suddenly Indian move of separating itself from the global capital market has taken the market aback internationally.

For last one year India has been outperforming major global markets which hints towards the country’s visibility for high growth clearly from the year 2021.

The country counts on the basic reasons behind its performance, still the extent creates concern, say the experts. They explain the reasons through which India could successfully outperform as well as the factors why investors should modify their return expectations in terms of the mid-term.

There are various justification about India’s out performance to global equities from the year 2021, India’s decoupling from the global capital markets with its extent has surprised the world community.

Both Indian currency and Indian equities have outperformed. The reason is quite apparent for the outperformance which is two-fold. The Indian economic cycle, in the first place was in a clear upswing,  as the double whammy of commodity crisis and Fed tightening  struck this year in the month of March during the first quarter.

In the second place, geopolitics has also supported India, as the world begins its very tough journey of reducing manufacturing dependence on China which was present till the second decade of this century.

Entering in the year 2022, the reforms mostly undertaken by the government during the past five to six years were set to pay off, including the bankruptcy code implementation; banking balance sheet repair; business tax rate reduction; GST implementation; along with the PLI scheme.

The above mentioned reforms brought corporate profitability with their increasing substantially. This plus profitability should permit corporate capex to pick up soon in the years to come.