Nifty's 50 outperformed U.S. and Japan stocks during the last sell-off and they've started to beat the S&P 500 this year.
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Taking stock of current economic conditions worldwide could partly address that question. While Europe is struggling and China is slowing down, India is booming. The rupee might also benefit partly from a U.S. recession if commodity prices tumble. As a net energy importer, India is highly sensitive to crude oil prices. A U.S. recession that lowers Brent crude oil prices might help prop up the Indian currency.
Elsewhere, the Indian government — after Prime Minister Narendra Modi took a significant hit in the general election — has also taken steps to mature the economy. Investors have welcomed the lower budget deficit forecast and"Eventually, India is likely to head into primary balance which supports a new high for corporate leverage, private investments and share of profits in GDP," said Morgan Stanley's equity strategist Ridham Desai in a note to clients this month.
"I wouldn't say that India is going to be completely detached, but I think that India is in a much better position to ride through the volatility noise," John Ewart, a portfolio manager behind Aubrey Capital's $600 million Global Emerging Markets fund, told CNBC's Inside India. More than half of Ewart's fund is invested in India.
The strategist pointed out that despite a two-day intense sell-off, Indian equities continue to have "rich valuations and lack of earnings support."
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