Both indexes began diverging sometime close to when Fed started to aggressively hike rates. It appears that the post-COVID rally was more favourable to the S&P but NIFTY is currently outperforming on absolute returns.
My idea is fundamentally simple. Financial prudence during the raging recovery paid off for us, the economy appears resilient and poised to do well in the near to mid-term. It also reflects that markets are pricing recessionary risk very differently to both markets.
Any ideas by others?
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.
Do you run models on the market sentiment side while taking into account some macro indicators? Is the time series part also taken in the model?
Unrelated but have you also tried any predictive models for any instruments to make money? Any reasonable success on that side?
TA seekh lo ser
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.
Nifty and sensex are poised for major corrections. I give it 2-3 months max. Too much hopium in the market.
How did you reach to this conclusion?
I agree to your conclusion, want to validate my hypothesis and assumptions.
Easy to spot for any experienced trader, really. All these machine learning and predictive models in the comments are hilarious.
Good understanding of technical analysis plus a little bit of fundamentals is all you need.
Markets have been fked internationally for a while now. India isn't as isolated or immune as people think. Plus the price action has been weak, those that pumped the market all this while are running dry on cash.
Crash is inevitable, just a matter of when.
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.
@Elon_Musk I seem to agree with this sentiment actually.
2 things fundamentally wrong in the comparison
You need to adjust for FX. India hasn’t really outperformed that much
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.
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?
Khareed bhai jitna HDFC khareed sakta hai, jis din bhaga rukega nahi
Haha, I will wait for some more quarters to see if the combined entity is worth the premium pricing.
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?
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