Indian markets straggle behind US and Europe in October, shows data

However, on a YTD basis, the S&P BSE Sensex declined 7%. The Dow fell 9.6%; the Euro Stoxx 50 down 26%

Markets in the US and Europe have tried to play catch-up with their Indian counterparts. After underperforming India on a year-to-date (YTD) basis, the US and European markets have outperformed India so far this month by a wide margin.

In October, the Dow Jones Industrial Average (Dow) gained 14.4 per cent; the Euro Stoxx 50 gained 9 per cent. By comparison, the Indian market gained less than 3 per cent in US dollar terms.

However, on a YTD basis, the S&P BSE Sensex declined 7 per cent. The Dow fell 9.6 per cent; the Euro Stoxx 50 down 26 per cent.

Even the Morgan Stanley Capital International Emerging Markets Index has fared poorly, dropping 31.4 per cent YTD, mainly dragged down by China’s underperformance.

The gain in the US and Europe follows a sharp sell-off in September. Analysts say the latest upmove in the developed markets is on optimism that the rate-hike cycle by the US Federal Reserve (Fed) will end sometime next year.

Investors expect the Fed to raise rates by 75 basis points (bps) for the fourth successive time next week, another 50 bps in December, and by a quarter point at the subsequent two meetings. 

A contraction in manufacturing, services, and lower-than-expected US home sales indicated some progress was being made in the Fed’s battle against runaway inflation.

Released last week, gross domestic product data briefly assuaged concerns of an imminent recession. Moreover, the economic slowdown in China is also enabling some flows to the US, observed experts.