 | | India under pressure
The long-term opportunities offered by India’s growth are well recognised, reflecting its huge population, favourable demographics, a burgeoning middle-class with a strong ethos of educational achievement and a developing culture of entrepreneurship. The last year however has seen both the equity market and currency fall sharply, leaving valuations at the lower end of historical averages. The period since August was particularly painful for investors, with the rupee being one of the weakest global currencies, falling by some 15 per cent against the US dollar and the Sensex index down by a similar amount.
The global stock market environ- ment has inevitably been a significant contributor to the negative outturn, but we believe that domestic conditions have played a greater part in waning investor confidence. A combination of circumstances, including twin fiscal and current account deficits, high inflation and slowing domestic growth have provided a particularly negative backcloth for the market.
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