Indian Stock Market Nears Record Highs Amid Global Bull Run
The Indian stock market is currently experiencing robust buying interest across various segments, fueled by optimism surrounding an India-US trade deal and favorable growth-inflation dynamics. Both the Sensex and the Nifty 50 indices are inching closer to their respective record highs, sparking widespread speculation that this could potentially mark the beginning of a sustained bull market phase for Indian equities.
Shankar Sharma's Contrarian View on Market Performance
However, ace investor and respected market veteran Shankar Sharma offers a contrasting perspective. While acknowledging the upward trajectory of Indian indices, Sharma, the founder of AI-tech firm GQuant, emphasizes that this rally must be evaluated within the broader context of a powerful global bull market that has unfolded over the past year.
"Over the past twelve months, most major global markets have delivered impressive gains ranging from 20% to as high as 80%," Sharma explained. "In stark contrast, the Indian market, when measured in US dollar terms, has actually declined by approximately 10%. Therefore, simply looking at the absolute level of Indian indices does not reveal the complete picture."
India's Significant Underperformance in Global Context
Sharma stresses that relative performance on the global stage is the critical metric for assessment. From this vantage point, India has notably underperformed its international peers by a substantial margin of nearly 30 to 40% over the last year. This significant gap, according to Sharma, effectively places India in what he terms a "relative bear market" compared to the rest of the world.
The Nifty 50's all-time record high stands at 26,373.20 points. At current trading levels, the index is merely about 2% below this historic peak. Despite this proximity to record territory, underlying market breadth tells a different story.
Broad Market Weakness Beneath Index Strength
A deeper analysis reveals considerable weakness beneath the surface of the headline indices. Data indicates that nearly 230 stocks within the broader Nifty 500 index have fallen more than 20% from their respective 52-week highs. Furthermore, approximately 100 stocks have experienced even steeper declines, crashing at least 30% or more from their one-year peaks.
Potential for Catch-Up Rally and Investment Strategy
Given the extent of India's recent underperformance, Sharma believes there may be room for a catch-up rally in the domestic market. However, he cautions investors to maintain moderate return expectations from Indian equities for the remainder of the year.
Despite his cautious overall outlook, Sharma expresses continued optimism for the small-cap segment of the market. "I remain fundamentally bullish on the small-cap space," he stated. "I have been actively deploying capital into this segment over the last six months. This reflects my personal investment strategy for India and should not be construed as formal investment advice."
This analysis is presented for educational purposes. The views and opinions expressed belong to the individual analyst. Investors are strongly advised to consult with certified financial experts and conduct their own due diligence before making any investment decisions, as market conditions are dynamic and subject to rapid change.
