Alroy Commentary - Indian equities beat record high from 2010
Investors keep guarded about Indian equities, even though BSE SENSEX index beat record high this week. Past few months, corporate profits and Fed taper delay boost Indian equities. However, high inflation in India and Fed tapering cast shadow over the country’s stocks.
Indian rupee had dropped around 20 % since May, and now it is still 10% lower. Weak rupee boosted exporters’ revenues, while exporters exchange money to India. It also bolstered companies' competitive advantage in global markets for goods and services. In addition to weak rupee, Fed decision of remaining current policy is another key factor. Therefore, Indian stocks have benefited, and beat to previous record from 2010.
Nevertheless, investors are wary about Indian equities. Inflation reached a seven-month high of 6.46% in September, at the same time, India consumer price index has been up more 9% than last year. Rupee weakness is worsening India's inflation. Besides high inflation, Fed's stimulus measures are another concern. Although it is widely expected that Fed will remaining its policy unchanged until December even January, Indian stocks are vulnerable to any news by the U.S. Federal Reserve.
Over past three months, we caught the rally of Indian assets. Now we will keep focus on Indian market, and make adjustment if need.
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