Key Insights
- India’s benchmark Nifty 50 index has surged 11.8% so far in 2024, outperforming the S&P 500’s 9% gain and crossing the 25,000 level for the first time.
- Analysts attribute Nifty 50’s resilience to India’s less reliance on U.S. demand and the country’s relative under-ownership by international investors, as well as the potential for monetary easing by the Reserve Bank of India.
MUMBAI (MarketsXplora) – India’s benchmark Nifty 50 index has emerged as a standout performer in global markets, surging 11.8% so far this year and outpacing the S&P 500’s 9% gain, analysts told CNBC.
The South Asian index crossed the 25,000 level for the first time last week, marking a significant milestone and fueling expectations that it could climb even higher in the remainder of 2024.
“The psychological 25,000 mark acted as a momentum catalyst, as round numbers tend to catch market attention,” said Saurabh Babel, head of research at WisdomTree. “Notably, the Nifty 50 surged from 20,000 to 25,000 in just 220 sessions, making it the fastest 5,000-point rally in its history.”
The benchmark BSE Sensex index also crossed the 80,000 mark for the first time last Wednesday, further underscoring the Indian market’s resilience.
Analysts attribute India’s outperformance to a few key factors.
“India’s growth is less reliant on U.S. demand than that of countries such as Taiwan and China,” said Malcolm Dorson, senior portfolio manager at Global X ETFs. “Second, India is still broadly under-owned by international investors. It’s a strong and well-known story, but many investors have been waiting for dips to buy.”
The prospect of the U.S. Federal Reserve cutting interest rates in September could also provide a further boost to Indian stocks.
“A U.S. rate cut would give the Reserve Bank of India more flexibility to start monetary easing as a depreciating U.S. dollar strengthens the rupee and lowers global borrowing costs,” Dorson explained.
While global markets plunged on Monday following a disappointing U.S. jobs report, India’s Nifty 50 relatively outperformed, dropping just 2.7% compared to the Nikkei 225’s 12.4% plunge – its worst session since the 1987 Black Monday crash.
“With continued momentum and favorable macro environment, India is well positioned to deliver further upside of 5%-15% this year,” Babel predicted.
India’s rise as a manufacturing powerhouse in Asia has also captured the attention of global investors.
“There’s increased interest from foreign investors, with exponentially increasing investments in India’s manufacturing sector,” Babel noted. “This is further supported by the fact that global supply chains are considering manufacturing in India to offset geopolitical risks, especially tensions between the U.S. and China.”
Apple, Google, Foxconn, and Micron Technology are among the global tech giants ramping up their investments and production in India, underscoring the country’s growing appeal as an alternative manufacturing hub.
“Global investors are realizing that India isn’t just a flash in the pan, but an opportunity to compound returns above cost of capital for their children and grandchildren as well,” Dorson said.
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