A rapidly deteriorating economy proved to be the bane of the Indian markets this year, leading to a 37% plunge in dollar terms, the second worst fall in a decade. Rising risk aversion globally owing to the sovereign debt crisis in Europe and a weak US economy contributed to the fall, but it was the sharp decline in economic fundamentals that led to India’s underperformance. High inflation and rising interest rates, slowing investments and growth, a high current account deficit, declining corporate profitability and the lack of an effective government response spooked investors as the realization dawned that the promise of double-digit growth may remain elusive for a while.
Also See | A year of gloom (PDF)
PDF by Yogesh Kumar/Mint