India ranks ninth in terms of market performance this year; Brazil tops

Despite gaining over six per cent, India is not among the top five best-performing global markets in 2018. BRIC peers Brazil and China are among top performing markets, with a gain of 10.3 per cent and nine per cent, respectively, in dollar terms. Even developed markets, including Japan and Germany, have gained more than India, gains in the US and other European markets are in line with the gains in the domestic market. Experts say the on-going exuberance in the domestic market is on account of a rising risk appetite among global investors.

The key drivers are improving global growth, strengthening commodities prices and weakening of the dollar. Global liquidity conditions also remain supportive, thanks to the ongoing bond-buying programme by the European Central Bank (ECB) and the Bank of Japan.

In a note on Monday, US-based Goldman Sachs said the risk appetite currently is at its “highest level on record” and is fuelling a rise in risky assets, with world market capitalisation gaining over $4 trillion this year. Foreign institutional investor (FII) inflows into the Indian markets are nearing $1.5 billion. Asian peers such as Taiwan and South Korea are attracting more FII flows than India Asian peers such as Taiwan and South Korea are attracting more FII flows than India. “While high-risk appetite increases the risk of disappointment, we find historically that the signal from macro data tends to trump the signal from risk appetite,” Goldman Sach note says.