Excerpt from my guest post on capitalmind.in exploring whether global markets really move together…
It was going so well. Carrying on from a blockbuster 2017, the NIFTY had risen almost 6% in 2018 by Jan 29th. And then the jitters started. By the end of the 1st week of Feb, we were down almost 2% for the year, after a budget that added Long Term Capital Gains taxes for Indian stocks after 13 years. As of this writing, the NIFTY is roughly back to where it started the year, with expectations that more volatility will follow.
One way to look at the correction is that Indian markets had run far ahead of earnings and so they were inevitable. Another more popular explanation seems to be all things global, be it the new tax, cues, weakness, or sell-off.
Samir’s off-the-cuff tweet seems to have some truth to it. Markets around the world do seem to take their cues from each other. This post, while not meant to be exhaustive, delves a little into the extent that they do.
Markets do broadly move together
Table below shows 19 years of absolute calendar-year returns for nine benchmark indices across seven major equity markets.
Find the rest of the post here on capitalmind.in