Chart of the week: Indian stocks soar to record highs

Sensex index chart

India’s Sensex stock market index jumped almost 14% in the second quarter of 2014 – the top performer of the world’s 40 biggest stock markets. It was also its best quarterly showing in five years.

Investors have driven stocks to record heights on hopes of bold structural reforms boosting sluggish GDP growth. The run-up makes stocks vulnerable. Valuations are looking pricey and the government’s budget on 10 July might struggle to meet inflated expectations.

But if the government does follow through on reforms, the resulting growth boost bodes well for raw materials, says Walter Molano of BCP Securities. India’s economy is roughly the same size as Brazil’s and Russia’s, but it has five times as many people. Yet, it consumes just 5% of global copper production, compared to China’s 50%.

If India’s economy is transformed, it “could put a great deal of stress on the global commodity market, pushing prices exponentially higher”.

• Stay up to date with MoneyWeek: Follow us on TwitterFacebook and Google+

MoneyWeek magazine

Latest issue:

Magazine cover
The hunt for water

The most valuable commodity

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

Robert Shiller: why one of the world's smartest economists is worried about the bond market

Merryn Somerset Webb talks to Yale professor and Nobel Prize winner Robert Shiller about how the power of 'stories' drives the global economy and creates financial bubbles.


Which investment platform?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from. They all offer various fee structures to suit individual investing habits.
Find out which one is best for you.


27 February 1900: The Labour Party is launched

Responding to the need for a single political party to represent the trade unions, the Labour Party was formed on this day in 1900, led by MP Keir Hardie.