India trumps US, Japan to claim 4th slot on returns chart

RBI governor Raghuram Rajan's exit, Brexit, or even the tension between India and Pakistan did little to dampen the spirit of the Indian market, which is the fourth-best performing equity market in the world since March 1, edging past heavyweights of the developed world such as the US, Japan and Germany.

Russia, Argentina and Brazil, which fell over 40% in 2015, have done better than India so far this year. The Nifty has returned 27% since March 1 in dollar terms compared with Dow's 9.51%. The MSCI World and MSCI Emerging Market indices have risen 10% and 21%, respectively, in the same period. Foreign fund flows and rapidly improving macroeconomic parameters remain the main drivers of the rally.

FIIs have pumped in Rs 69,000 crore since March while domestic mutual funds have invested about Rs 5,400 crore. “There's no doubt that prices have run up because of liquidity, but this liquidity is coming with hope, not greed. There's hope that corporate earnings will revive, the monsoon has been good, and the festival pick-up has been good.Also, interest rates have been cut at the borrowers' level, capacity utilisation is inching up, and exports are recovering,“ said Nilesh Shah, MD, Kotak MF.