The Indian stock market is enjoying decent buying interest across segments in the wake of an India-US trade deal amid healthy growth-inflation dynamics. The Sensex and the Nifty 50 are getting closer to their respective record highs, raising speculations that this could be the start of a bull market.
However, ace investor and market veteran Shankar Sharma believes India is in a relative bear market compared to the rest of the world.
While the Indian stock market appears to be approaching its all-time high, Sharma, the founder of AI-tech firm GQuant, says this rally must be viewed in the context of a broader global bull market.
“Over the past year, most global markets have gained anywhere between 20% and 80%, while India is down around 10% in US dollar terms. Therefore, the absolute level of Indian indices does not tell the full story,” Sharma explained.
“What matters is performance in a global context. In that sense, India has underperformed global markets by nearly 30–40% over the last one year. This means India is effectively in a relative bear market compared to the rest of the world,” said Sharma.
The Nifty’s record high is 26,373.20. At the current level, the index is about 2% below its all-time high.
However, nearly 230 stocks of the Nifty 500 index are over 20% down from their 52-week highs. Nearly 100 stocks have crashed at least 30% or more from their one-year peaks.
Sharma believes that there may be room for a catch-up rally in India, given the extent of the underperformance. However, he believes investors should have moderate return expectations from the Indian stock market this year.
He remains positive on the small-cap space.
“I remain bullish on the small-cap space, and I have been putting money to work in the last six months into this segment. This is not investment advice, but only my strategy in India,” said Sharma.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
