[Thread] Why is the Indian Public Market outperforming the US Public Market?

Ran a few machine learning models on some exogenous features relevant to this and it appears the consumer durable demand in the US got extremely curtailed on the supply side leading to inflation but more importantly now demand side is weakening. It looks a little grim.

Indian economy has been more immune to expected inflation vs. the US That's been the common narrative that I've come across India 1 Raghuram Rajan 0

Adjusted for the depreciation in INR (~6-7% annually against USD), the picture would look very different. Infact ₹ maybe the worst performing currency and reduces an avg NRI Indian's spending power viz a viz Bangladeshi Taka, Vietnamese Dong etc. Infact, a 4-5% growth with a stable currency is much better than 8% growth with a 6-7% depreciating currency relatively speaking. Even if you were to leave that aside, developing markets should give higher returns given the risk that investors bear when they invest in them. By the way, Indian stock market is very light on high beta/high growth tech stocks - something that NASDAQ amply provides for. Most of Indian stock market growth story is traditional Gujarati business houses which are making hay while BJP shines.

I think the US market sentiments were a bit positive in Q2 a bit and they made recovery on the recession signs at the start of the year, but now again signs are negative. Consumer demand is weak, interest rates are still high, talks about a soft landing on the recession making everyone itchy, nobody knows what the fuck to make of the bond yield curve. Global signs are also still mixed. India is in a weird spot although everyone is bullish on the country's growth which we see priced in the numbers, we all know our IT sector will get nuked once the US goes into any kind of recession. Startups will shut down, MNCs will fire, demand will fall, bla bla bla. Overall I think India would do well over the next few years even if the global economy shits the bed.

2 things fundamentally wrong in the comparison 1. Currency compare across same currency either keep both of them in USD or INR 2. Try to find the TRI version of the index which account for buybacks and dividends for both if them, Then you will have more clear picture from what I have heard there isn't a huge diff between the 2

You need to adjust for FX. India hasn’t really outperformed that much

Nifty and sensex are poised for major corrections. I give it 2-3 months max. Too much hopium in the market.

We have lesser inflation impact + our retail SIP book has really kicked in post pandemic. We would have seen big falls previously with the kind of selling FIIs did last year.

Shouldn’t Indian markets outperform US markets considering the fact that we are still a developing country and have a lot more room for growth, whereas in the other hand the growth is US has stagnated?

Aren’t you correlating something which might not be a good comparison? For example - HDFC Bank is doing great in terms of PAT and margins but stock price isn’t moving at all. Should we call XYZ bank doing great against HDFC?

All the credit for this outperformance should be given to RBI. They have been handling the inflation situation way better than FED. Look at the CPI data that came yesterday, we are doing exceptionally well. Not just for now but we are going to outperform every large economy for the next decade at least. Good times ahead.

Far too small of a sample set to make any claim like this.

Comparing absolute dollar returns to ruppe denominated ones is bad economics. Adjust for inflation and depreciation and you just might get a good statistical approximation.

Ha ha this flawed