February 18, 2019

The Nifty is No Longer a Play on the Indian Economy

The Nifty has fallen far behind the Indian economy

Over the last ten years, India’s GDP growth (in nominal terms) has averaged 13% per annum whilst the most popular benchmark index in India, the Nifty, has seen its earnings grow at a mere 8% per annum. In fact, in nine out of the last ten years, the Nifty’s earnings growth has trailed nominal GDP by a country mile (the only exception being FY11). In America on the other hand, nominal GDP growth over the past decade has been barely 4% and yet the S&P 500’s earnings has grown at 12% per annum, a full 400bps faster than the Nifty (even without converting the Nifty’s earnings to US dollars)! Why do the benchmark indices in India and America display completely opposite trends (when compared to the GDP growth of their respective economies) and what implications does that have for investors?

Read more at http://marcellus.in/blogs/marcellus-the-nifty-is-no-longer-a-play-on-the-indian-economy

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