Money on the markets
A maturing market amid the mayhem
A lot of comparisons are made between China and India but there are myriad differences between the two developing nations — some wide, some not so wide. It would be a huge mistake to believe the two markets and economies are developing along similar lines, or indeed, behaving in the same way, particularly the financial markets.
Take the respective stock markets. The first chart shows the last decade of both India’s benchmark SENSEX stock index and China’s Shanghai Composite. One thing that is immediately evident is that the Composite outperformed India by a long way in the run-up to the very overblown highs. In fact, using 2005 as a starting point it put on a staggering 380 percent while the SENSEX managed 225 percent over the same period.
When the crunch came, the fall was as dramatic as the rally and both markets collapsed with the Composite dropping to a low 73 percent off the peak and the SENSEX 64 percent.
In terms of investment $100 invested in both markets in 2005 before the respective rallies got underway would today be worth $242 (China) and $228 (India) respectively, not a huge amount of difference between the two in terms of overall performance over the period.
The top Sensex gainers included ACC, DLF and JP Associates, all gaining over 8 percent each.
The BSE Sensex closed 6.4 percent higher on Monday, its biggest one-day gain in six months, boosted by encouraging manufacturing data at home and renewed investor activity across Asia.
The benchmark closed 731.5 points higher at 12,134.75, while the Nifty ended 5.1 percent higher at 3654.
The rise in the Sensex was led by Reliance Industries, Infosys and ICICI Bank.
On the sectoral front, the BSE Metal Index gained nearly 8.7 percent. This was followed by the IT Index which ended up 8.4 percent. All sectoral indices closed the day in the green.
The benchmark index shed 0.7 pct on Friday as disappointing growth data for the third quarter dampened investor sentiments.