Skip to content

Indian stock market surges as Chinese stocks plummet

Indian stock market surges as Chinese stocks plummet
Elmaz Sabovic

As China’s stock market falters, India seizes the opportunity as investors choose to allocate their resources to the world’s biggest democracy, putting aside problems such as overvalued stocks, election year, and judiciary issues.

With already boasting a solid $4 trillion value and attracting $20 billion in 2023 alone, India has emerged as a perfect substitute for foreign and domestic investors that elevated the NSE Nifty 50 Index by 23% in the previous 12 months.

The International Monetary Fund (IMF) projects India’s GDP to expand by 6.5% in 2024, while China’s growth forecast is 4.6%.

Projected GDP growth for the U.S., China, and India until 2050. Source: Srikar Kashyap
Projected GDP growth for the U.S., China, and India until 2050. Source: Srikar Kashyap

But with the short-term prospect looking bullish, it is impossible to overlook potential future issues that could dampen the growth of India’s economy and, therefore, its stock market.

Potential performance issues

Global investors’ desire to own a piece of the brightest market in the emerging world has been the catalyst of a surge in valuation, but that has meant an under-appreciation of the vulnerability and risks.

The market has surged to become one of the most costly globally. Based on data, the 12-month forward price-to-earnings ratio, a commonly employed valuation metric, stands at 22.39 for the Nifty 50 index, surpassing even the valuation of China’s market of 9.25 by more than double and close to that of the U.S. S&P 500, which sits at 23.27.

India's P/E ratio. Source: Trendlyne
India’s P/E ratio. Source: Trendlyne

Politics may play a huge role

Politics remain the biggest concern for investors as the May elections draw close. Forecasts see Prime Minister Modi and his party as clear winners. But whether they will come to fruition remains to be seen.

If an upset happens, and the ruling coalition doesn’t secure the majority, it might be harder to continue with economic packages and reforms driving market success.

It is hard for investors not to overlook the potential future issues, with the short-term prospect remaining alluring and lucrative. However, attention should be exercised.

Buy stocks now with Interactive Brokers – the most advanced investment platform

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

Best Crypto Exchange for Intermediate Traders and Investors

  • Invest in cryptocurrencies and 3,000+ other assets including stocks and precious metals.

  • 0% commission on stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.

  • Copy top-performing traders in real time, automatically.

  • eToro USA is registered with FINRA for securities trading.

30+ million Users
Securities trading offered by eToro USA Securities, Inc. (“the BD”), member of FINRA and SIPC. Cryptocurrency offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. Finbold.com is not an affiliate and may be compensated if you access certain products or services offered by the MSB and/or the BD

Read Next:

Finance Digest

By subscribing you agree with Finbold T&C’s & Privacy Policy

Related posts

Sign Up

or

By submitting my information, I agree to the Privacy Policy and Terms of Service.

Already have an account? Sign In

Disclaimer: The information on this website is for general informational and educational purposes only and does not constitute financial, legal, tax, or investment advice. This site does not make any financial promotions, and all content is strictly informational. By using this site, you agree to our full disclaimer and terms of use. For more information, please read our complete Global Disclaimer.