Chart of the week: Indian stocks soar to record highs

Reform hopes have made India's benchmark Sensex index the top performer of the world’s 40 biggest stock markets.

698-Sensex

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".

Recommended

Four of the best investment trusts for investing in emerging markets
Investment trusts

Four of the best investment trusts for investing in emerging markets

Investors need to tread very carefully in this risky sector. Here are the best ways to approach it
22 Mar 2021
Storm brews in emerging markets as investors pull cash out
Emerging markets

Storm brews in emerging markets as investors pull cash out

Foreign investors have begun to pull cash out of emerging markets as they begin to look less attractive when compared to the rising return from holdin…
12 Mar 2021
Stockmarkets shrug off turbulence
Stockmarkets

Stockmarkets shrug off turbulence

Stockmarkets have hit their first bout of turbulence of the year, but most are clinging onto January’s gains.
4 Feb 2021
I wish I knew what an emerging market was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what an emerging market was, but I’m too embarrassed to ask

This week's “too embarrassed to ask” explains what emerging markets are, and why you might want to invest in them.
9 Sep 2020

Most Popular

The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
Four investment trusts for income investors to buy now
Investment trusts

Four investment trusts for income investors to buy now

Some high-yielding listed lending funds have come through the crisis with flying colours. David Stevenson picks four of the best.
12 Apr 2021
Central banks are rushing to build digital currencies. What are they, and what do they mean for you?
Bitcoin

Central banks are rushing to build digital currencies. What are they, and what do they mean for you?

As bitcoin continues to soar in value, many of the world’s central banks are looking to emulate it by issuing their own digital currencies. But centra…
8 Apr 2021