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The Road Ahead for Sensex and the Indian Economy...
Fri, 21 Oct Pre-Open

The US presidential election has become a hot topic of late. Mainstream media has gone gaga with the conclusion of the third and last debate between republican president nominees Donald Trump and Hillary Clinton. That said, one particular bit in the debate got the attention of most Indians. It came when Donald Trump cited India's growth rate to compare it with the US economy.

Donald Trump, during the debate said Indian is growing at 8%, while US at 1%. By doing so he cited that America's economy is dying and is lagging behind India and China. His comments revived sentiments that India is one of the top performing economies in the world.

But this is not something new. India was crowned as one of the fastest growing economy in the world early this year. Along with this, Indian stock markets were seen less exposed to the risks of global economic slowdown witnessed during the start of 2016. This also attracted many foreign investors to Indian markets.

So, where does Indian stock markets stand at present as compared to their global peers? We came across an article in the Economic Times that states how Indian markets have fared during the last six months.

As per the article, the Indian market put up the fourth-best performance in the world since March 1, 2016. In doing so, they edged past heavyweights of the developed world such as the US, Japan, and Germany.

Going by the numbers, the Nifty returned 27% since March 1 in dollar terms. This is quite good when compared with Dow's 9.5% return during the corresponding period. Also, the returns by Nifty stand tall when compared with the MSCI World and MSCI Emerging Market indices. As per the article, the MSCI World and MSCI Emerging Market indices have risen 10% and 21%, respectively, in the same period.

The above data has come as a welcome breather for Indian markets. The only question is will the Indian economy and Indian stock markets continue this momentum?

As far as the Indian economy is concerned, there are considerable challenges that lie ahead which the government seriously needs to address. This we say is because the common man in India doesn't seem to be doing much better now than he did a few years ago. One of our editions of The 5 Minute WrapUp confirms this fact while stating the common thread between most of India's economic problems.

For Indian stock markets, our research in March revealed that, in aggregate, the profit margins of Sensex companies were trading at ten-year lows. So, if profit margins were to revert to their long-term averages, the Sensex may hit 40,000 three to four years down the line. To know more on this, you can download our special report, Sensex 40,000: 4 Stocks to Profit from the Coming Stock Market Wave.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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