Indian shares have entered a new bull market with a 20% gain from 2010 lows and so have other emerging markets as investors from developed nations chase returns.
It is believed that rally may continue as central banks in the west keep interest rates at record lows, forcing to borrow cheap and invest in highly-yielding emerging markets.
What’s driving the Indian stocks?
Foreigners are flocking to most emerging markets, including India since returns are higher as compared to other countries.
Indian companies earning growth would be sustained due to domestic demands where consumers don’t suffer from high debt, unlike economies in the west.
Which sectors are likely to do well?
Banks, Capital goods, Real estate and Metals are preferred picks of traders since they provide high returns in Bull Market.
How long will the rally last?
As long as the US fed and European central bank keep interest rates low, or west plunges into recession again.
What are the possible downsides?
Interest rates may go up as inflation accelerates which in turn could reduce demand.
Source : ET
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