Indian Fund reporter Guo Yanjun

Last week, the Indian stock market encountered "Black Wednesday", and the overall market volume plummeted. The Indian Sense Index fell 906 points and fell below the 73000 mark.This week, the Indian Sense Index continued to fluctuate down, falling below the 72000 mark.

In the past 20 years, the Indian stock market has performed strongly.Since January 2000, the Indian Sensex30 Index has been over 12 times, and its increase far exceeds the Standard 500 Index, the Tokyo Nikkei 225 Index and the CSI 300 Index.

What are the factors that support the Indian stock market continued to rise?Can the Indian stock market regain the rise in the future?What risks should investors pay attention to?In this regard, a reporter from the Indian Fund interviewed a number of Chinese and foreign institutions.

Many factors support even innovative high

Regarding the reasons for the continuous rise in the Indian stock market, Wang Yi, chief economist of Great Wall Securities, pointed out that from the perspective of economic fundamentals, in the past 20 years, India's actual GDP growth rate has remained high. In the third quarter of 2000 to 2023The average speed is 6.63%, which is one of the fastest economic growth countries.Udabur Investment

In addition, Wang Yi said that in terms of the stock market system, the Indian stock market does not have a period of "delisting risk warning", and the punishment for mandatory delisting is severe.The derivatives trading market has continued to expand its capacity under the promotion of the State Exchange, and the low -rate charging mechanism has reduced the cost of short -term transaction.In addition, the reform of the company's system has promoted industry innovation, bringing significant changes in market practice and transaction activity.

Wang Yi, director of the Ministry of Emperor Dongying, believes that the Indian market has increased investment -driven growth in recent years. Although it was initiated by national fiscal expenditures, the rapid expansion of the private sector has driven the overall investment scale to rise rapidly.In the investment of private sector, the rapid growth of foreign direct investment cannot be ignored.

In addition, Wang Yi said that the depreciation of India's local currency has also superimposed the lower cost advantage to India's exports, and many re -export trade is also completed through India.India's overall inflation level has also pushed up Indian stocks that have been priced in local currency.

The interviewed institutions continue to be optimistic

Is the overall valuation of the current Indian stock market reasonable?Can corporate profits continue to rise in the Indian stock market?Interviewees generally believe that India's stock market valuation is supportive.

First of all, Indian enterprises have grown strong profit growth.Mike Shiao, chief investment director of Jingshun Asia (except Japan), believes that the strong demand for Indian manufacturing and non -consumer goods industries is increasing pricing power and promoting profit growth.Enterprises in all walks of life have continued to rise, and the return rate of equity (ROE) reflects positive growth.It is estimated that by fiscal 2024, the ROE of Indian companies may reach a new high in ten years, reaching 15%, rigorous and orderly expansion or more expected to promote ROE to continue to surge.Indian enterprises have grown strongly, with an average profit growth of 22%in the past five years.Profit is currently experiencing a significant cyclical upward trend.Indian companies' earnings per share growth is far higher than most developed economies and emerging markets. It is expected that it will reach about 17%by 2024.Historical trends confirm that India's economic growth can be transformed into substantial corporate profitability.

Mike Shiao said: "It is worth noting that small -cap stocks in India often have a higher price -earnings ratio compared to the MSCI India index. We expect large -cap stocks to have a greater upward trend in 2024, because it usually shows more moreHigh ROE ""

Secondly, Indian companies have strong fundamentals.Mike Shiao pointed out that in the past ten years, Indian companies can effectively manage the balance sheet and maintain low -leverage positions, thereby benefiting from growth driven by demand.Indian companies' debt/share capital ratio is at a historical low, about 0.5 times.

Third, it is a positive macro factor.Mike Shiao believes that the structural transformation of the Indian economy in the past ten years has brought confidence in the market.India's growth cycle is expected to have strong profitability in the next three to four years.The decline in interest rate expectations will boost the market's confidence in the future cash flow of India, and its strong relative growth will further benefit this positive prospect.

Fourth, it is included in the main bond index.Malcolm Dorson, director of the Global X ETFS emerging market strategy and senior investment portfolio manager of emerging market stocks, pointed out that Indian sovereign bonds are included in the important international index will benefit the Indian stock market.Indian sovereign bonds will be included in JP Morgan Chase's global bond index from June this year.Bloomberg Index Service Co., Ltd. has also announced recently that from January 2025, India's "complete open route" bonds will be included in the Bloomberg Emerging Market Coin Bond Index.

Fifth, the income growth of the public.Malcolm Dorson said India's per capita annual income has just exceeded an important mark of $ 2,000.As more and more ordinary people in India are wealthy, it is expected that the overall consumption level will increase, bringing more profitable growth to listed companies.At the same time, India will also benefit from the diversification of global supply chain and demographic dividend.

Sixth, the policy is good.Malcolm Dorson, he expects that Prime Minister Modi will probably be re -elected, thereby ensuring the continuity of a very friendly economic policy for the market.Wang Yi said that the benchmark interest rate of India was also at a relatively high level (6.5%). If inflation can decrease, the interest rate reduction expectations are expected to continue to promote the market rise.

Follow the six risks

So, what risks should they prevent in India in the future?

First, the trade deficit is increased.Wang Yi said that long -term deficit in India may lead to decline in foreign exchange reserves and fluctuations in exchange rates.Malcolm Dorson pointed out that rising energy prices will put pressure on India's trade balance.Wang Yi believes that the instability of the rupee and weak foreign exchange reserves have challenged India's overall investment stability.If there is a large foreign capital outflow, it is difficult for the Indian central bank to respond through foreign exchange reserves.

Secondly, the unemployment rate exceeded expectations.Wang Yi believes that India still has problems such as high unemployment rate and imbalance in employment structure.It may lead to social instability and increase in financial pressure on the government.

Third, the Indian manufacturing industry is less recovery.Wang Yi believes that the manufacturing industry occupies an important position in the Indian economy, and its recovery is not as good as expected to have a negative impact on the entire economy, including the decline in investor confidence.

The fourth is political risk.Malcolm Dorson pointed out whether Modi can be re -elected to bring uncertainty to the market.Wang Yi said that if Modi this year's election fails to be re -elected as scheduled, it will lead to the incompleteness of government policies, the decline in economic support, and the turning of reform, which will bring uncertainty to the future market.

The fifth is the risk of foreign outbound exit.Wang Yi also pointed out that the Indian local stock market is not a complete open market, especially for the funding for funds to complete the tax, which is a large burden for overseas investors -because the Indian market tax system is more complicated and often changes.Whether it is investment in the secondary market or the first -level market, it will involve the problem of easy outbound and difficult to exit.

Sixth, the company's risk of governance.Malcolm Dorson pointed out that corporate governance and protection of the rights of small and medium investors are the risks that need to pay attention to any emerging markets.

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Original title: "The Indian stock market suddenly plummetedNagpur Stock!The institution is hot comes "