THE steep correction witnessed by
the market has shattered the myth that the Indian market will largely remain
unaffected by what happens to the global markets. Despite economic
macro-fundamentals remaining solid and, in fact, benefitting from softening commodity
prices, no market can remain decoupled from what happens in the world. The
other theory many analysts have been putting forward is that the steep
correction has mainly been caused by global factors such as the Fed rate hike,
the massive slowdown in China coupled with devaluation of the yuan and
struggling commodity exporting economies, but the fact remains that local
factors are equal culprits. The market has run up way ahead of fundamentals
and, at 18 times its trailing 12 months earnings post-correction, is still
pricier than most of its emerging market (EM) peers as also many of the
developed markets.
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