New Delhi, Aug 6
The Indian benchmark indices remain more resilient amid the US economic slowdown, according to Jefferies, as the Dow Jones Industrial Average has posted its worst day in nearly two years.
The risk of a US economic downturn has now risen materially, according to Christopher Wood, global head of equity strategy at Jefferies. On the other hand, the Indian stock market is "much more resilient in the face of a US downturn and related Wall Street sell-off than the likes of Japan", he wrote in a recent note.
According to reports, US employers created 114,000 jobs in July, below the expectations of 175,000 new roles. The rate of unemployment also went up to 4.3 per cent, almost a three-year high.
When it comes to India, the country with strong market fundamentals appears to be far more resilient to the turmoil as and when it happens as we saw on Monday. The Indian stock market, along with its Asian peers, bounced back on Tuesday with much resilience.
"We believe recent market action makes it crystal clear, if such clarification were needed, that the Indian stock market is much more resilient in the face of a US downturn and related Wall Street sell-off than the likes of Japan," the analyst posted.
The country's stock market rally has been driven by domestic money and Wood is thankful "that around 26 per cent of his GREED & fear global long-only portfolio is invested in India".
According to him, India has unambiguously healthy demand for equity in light of private equity's monumental pipeline of investments.
Domestic investors have always come to the rescue of the Indian stock markets. On Monday, domestic institutional investors (DIIs) bought for Rs 9,155 crore when FIIs sold for Rs 10,073 crore.
Meanwhile, the foreign portfolio investors (FPIs) infused Rs 54,727 core in equity and debt last month. For the full year-to-date, FPI investment in equity stands at Rs 35,565 crore in the country.