Is the Fed’s gift enough to cheer emerging markets?
₹1,65,845 crore. The pace of FPI inflows picked-up in December. According to NSDL data, FPIs bought Indian stocks worth ₹47,569 crore so far in December–the highest since July.
To be sure, India is seen relatively better placed than its Asian peers on stable macros and resilience in a tough global macro environment, with benchmark indices Nifty50 and S&P BSE Sensex breaching key psychological levels. However, valuations are expensive. The MSCI India index is trading at a one-year forward price-to-earnings multiple of 21 times, show Bloomberg data.
This is a steep premium to MSCI Asia Ex-Japan and MSCI EM Index. While the outcome of the recently concluded state elections has been favourable, any negative surprise on the political front in the 2024 general election could be a sentiment dampener. Further, the recently released minutes of the Reserve Bank of India’s December policy meeting indicates that rate cuts may still be some time away.
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