EMs near bull market, India lags

The MSCI Emerging Market (EM) Index, a gauge for performance of developing nations, including India and China, has rallied around 19 per cent from this year's low. A rally of 20 per cent is considered to be a bull market.

This is a sharp reversal in fortunes, as concern over health of the global economy, particularly China, pushed the EM index to a six-and-a-half-year low on January 21.

The desire shown by global central banks to support growth has buoyed the prospects of emerging markets, which typically rely on foreign flows. The US Federal Reserve has decided to go slow on interest rate hikes this year, while the European Central Bank and Bank of Japan have also taken steps to spur growth. These measures have improved investors' appetite for risk, sparking sharp inflow into EMs.

Indian markets, for instance, have received nearly $2 billion in March, helping them recoup this year's losses from nearly 13 per cent to only 4.5 per cent. Most EMs, with the exception of China and India, have turned positive for the year. The best-performing EM in the latest bout of rally has been Brazil. The US Fed stance has led to weakening of the dollar, a trend seen positive for developing nations.