MSCI India index races past 55% over EM peers

Mumbai: The continuing foreign inflows --$8.1 billion YTD -- has driven up the valuation premium of MSCI India index past 55 per cent and 12 per cent against MSCI Emerging Markets and MSCI World indices, respectively, by mid-June, according to a brokerage report.

The domestic market has been the best performer globally YTD (year-to-date), with the Sensex rallying 56.2 per cent in the past 12 months, and 5.5 per cent in the past one month and 5.1 per cent in the last three months; while the same for Nifty has been 58.8 per cent, 5.1 per cent and 6.6 per cent, respectively, Credit Suisse Wealth Management India report said on Monday.

Compared to this, S&P 500 gained 35.6 per cent in the past one year, 1.4 per cent in the past 30 days and 6.2 per cent in the last 90 days; Euro Stoxx 50 at 27.3, 8 and 8; MSCI emerging market 37, 3.9 and 1.5; MSCI Asia ex-Japan 36.6, 3.6 and minus 0.5; MSCI China 23.6, 1.5 and minus 5.5; Nikkei 29.2, 4.3 and minus 3; and the MSCI World index rallied 35.3 per cent, 2.3 and 5.4 per cent, as per the report.

The valuation premium of the MSCI India index has reached 55 per cent and 12 per cent by mid-June as against the MSCI Emerging Markets and MSCI World indices, as also much higher than the five-year average premium of 45 per cent and eight per cent, respectively, the report noted. We expect the valuation premium to remain at elevated levels, as it offers one of the fastest growth in the region, Credit Suisse Wealth Management India said. It attributed the same to the robust FPI inflows $8.1 billion so far this year and $2.3 billion since May, and improving corporate fundamentals like balance sheet health and higher return on equities.