Dollar-adjusted Sensex still 20% from all time highs

Currency has depreciated from around Rs 40 to Rs 60 since previous high in 2008

The The S&P BSE Dollex 30, an index which looks at Sensex returns adjusted for changes in the dollar exchange rate, is currently at 3,626.08.

The highest level for the index was 4,365. It will need to gain another 738.92 points or more than 20% to reach its previous all time highs. The Sensex has been touching new all-time highs repeatedly. It crossed the 27,000 mark earlier in the month.

The difference between the two indices is because of the difference in exchange rates during the two times. The going rate for a dollar during January 2008 was around the Rs 40. This is now near Rs 61, a 50% difference.

While a falling rupee erodes the gains of existing foreign investors, it makes Indian stocks cheaper for fresh money.

Foreign institutional investors or FIIs(now called Foreign Portfolio Investors or FPIs) have been net buyers in Indian equities by over Rs 84,000 crore in this calendar year.  These foreign flows are expected to continue to be strong, according to Karvy Stock Broking's 'India Equity:Diwali Strategy' note

"The revival in global risk appetite has resulted in fresh FII inflows into emerging market equities with India turning out to be a big beneficiary. India has been one of the top performing equity markets since January this year with fresh equity inflows of 12.5 billion dollars. We expect the remaining months of this fiscal to witness similar amount of inflows," it said.

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