Nifty mirroring Asian indices

Nifty mirroring Asian indices
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First Published: Thu, Nov 06 2008. 09 44 PM IST
Updated: Thu, Nov 06 2008. 09 44 PM IST
New Delhi: As the global crisis hits investor sentiment the world over, Indian markets have taken to mirroring the Asian bourses more than the US exchanges. A study conducted by the Securities & Exchange Board of India or Sebi found this while researching the correlation between the movement of Indian, American and Asian stock markets.
Sebi member KM Abraham said while in the time of boom before the beginning of the financial crisis, the Nifty had decoupled from the US markets. It even had a 100-day period of negative correlation. It had a 40-50% correlation with the Asian markets at the same time. But the Nifty is now following its Asian counterparts. “In the period of crisis we are all huddling together in fear,” he says.
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For the 13-month period between September 2007 and 5 November, 2008 the correlation between Nifty and the Dow Jones was 80% while the correlation between the Nifty and Asian exchanges like Hang Seng and KLCI was between 93% and 95%. With the investor sentiment weighing in on the negative, this correlation has now increased to 90% for the Dow, it’s higher at 98% for the Asian exchanges.
It seems with an end to the global crisis far from sight and the world economy slowing down, investors have lost confidence in being able to take independent calls and have resorted to the opinion of the masses. As bears rule the roost, Indian markets seem to have decided it’s wise to follow them.
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First Published: Thu, Nov 06 2008. 09 44 PM IST