Correlation between India and US markets hits 17-month high, shows data

Stocks in India are moving in parallel with their US peers at the closest pace since early 2021, with a 30-day correlation-coefficient measure between the NSE Nifty 50 and S&P 500 indices recently reaching 0.68 out of a possible 1. 

India’s blue-chip gauge gained nearly 5 per cent this month, compared to 4.6 per cent for the S&P 500 and 0.33 per cent for the MSCI Asia Pacific measure, with the latter dragged by concerns over China’s economic growth and Covid tally.

The moderating outlooks for inflation — especially energy-driven — and Fed interest-rate hikes may be connecting points, with foreign institutional investment outflows from Indian equities moderating in July.