Mumbai: India’s bellwether equity index, the Bombay Stock Exchange’s Sensex that recorded the third sharpest fall among key Asian indices since the global credit crisis hit stock markets, is lagging behind other major Asian markets in regaining the ground lost.
In fact, the Sensex is at the bottom of the table among six key Asian indices when it comes to recouping the losses, according to Bloomberg data.
After posting its highest closing at 20,873.33 points on 8 January, the Sensex slipped some 29% to 14,809.49 on 17 March. Since then, the index has recovered close to 13% to close at 16,721.08 on Thursday.
The recovery of markets such as China, Japan, Hong Kong, South Korea and Singapore has been more than that of the Sensex. In fact, with the exception of China, other key Asian markets were relatively less affected by the global crisis when compared with India.
The Hang Seng index of Hong Kong made the sharpest recovery, gaining more than 21% after losing 23.6% between 9 January and 17 March.
China is the second biggest gainer, having bounced 15.7% from this year’s bottom. The Shanghai stock index was lagging behind the Sensex until Wednesday, with a mere 6% recovery, but it changed dramatically on Thursday with the index gaining more than 9% after Beijing cut transaction tax on securities to boost investor sentiment.
The Shanghai index had lost around 44% between mid-January and 18 April. The Vietnamese index, much smaller in size, was the only one that had dropped more than the Chinese index in Asia.
During last year’s bull run, India was largely following the Chinese markets.
In a November interview with Mint, Christopher Wood, managing director and global equity strategist of investment research firm CLSA Asia Pacific Markets, had said China is key to the price of Indian equities. “The valuations in (the) Chinese equity market is forcing investors to rerate India. If China did not exist, the Sensex would not be trading as high as it is today,” Wood had said.
Most analysts agree India is no longer an expensive market. “India’s internal economic factors are holding back a recovery rally,” said a Hong Kong-based portfolio fund manager, who did not wish to be named.
Japan’s Nikkei, South Korea’s Kospi and Singapore’s Straits Times index have also gained more than the Sensex.
The Nikkei had lost 20%, Kospi 15.5% and Straits about 19% from their highs. All the three recovered around 13-14% since 17 March, when they had hit their lowest levels this year.