expects the Indian central bank to raise its benchmark repurchase rate to 5.75% by end-December, up from its 5% forecast earlier.
The less buoyant mood is already affecting India’s stock market, which until recently had been among the top postpandemic performers. Nevertheless so far at least the damage hasn’t been catastrophic: India’s S&P BSE Sensex fell over 2% Wednesday before recouping some losses Thursday. Overalla whopping 77% in the past two years. Over the last 12 months, the MSCI India index rose more than 16%, outperforming the overall MSCI Emerging Markets Index, which fell 20%.
Things could get worse before they get better. For one, many Indian stocks are still richly priced compared with peers even after the recent selloff. In price to earnings terms, the MSCI India was trading at a 92% premium to the MSCI EM at the end of March, far above the historical average premium of 60%, according to data provided by brokerage
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