Indian stocks worst BRIC performers in 2008

13 Jul, 2008, 1145 hrs IST, PTI

NEW DELHI: With the bears strengthening their hold on the domestic stock market, Indian equities have given the worst returns to investors compared to their peers in the three other BRIC nations Brazil, Russia and China so far this year.

According to an analysis of MSCI Barra indices, a measure of returns from various stock markets across the world for foreign investors, Indian stocks have given the highest negative return among the four BRIC countries till July 11.

Indian stocks have provided a negative return of over 41 per cent so far this year, while China and Russian markets have given losses of 25.55 per cent and 10.15 per cent, each.

At the same time, investors have actually gained in Brazil, although marginally, with stocks there rising 0.13 per cent since the beginning of this year, according to an analysis of performances of MSCI Indices for various nations.

"India was among the best performing markets last year, but the correction suffered by the domestic market this year has been very severe which has sent it into a downward frenzy," Arun Kejriwal Director of Kejriwal Research and Investment Services (KRIS) told PTI.

Another reason why Indian markets have performed badly is that all the macro economic indicators which were driving the bulls last year such as strong GDP growth, strengthening of the Indian currency and inflation at controlled levels, have all back-fired this year, Kejriwal added.

Also, for the second month in a row this fiscal the industry performed poorly with industrial growth, as reflected by the Index of Industrial Production (IIP), dipping to 5 per cent in April-May against 10.9 per cent a year-ago.

Besides, the soaring inflation has been hogging the limelight since the past few months and the rise in the prices index to double-digit figures has led the Government to take strict measures to curb the surge.

Inflation rose to 11.89 per cent for the week ended June 28, against 4.42 per cent in the same week a year-ago.

Brazil is one of the few emerging nations which have actually managed to provide gains of 0.13 per cent in the period of little more than six months so far this year.

"Brazil has performed relatively better as its ethanol and sugar reserves provide it an insulation from the rising global crude oil prices leading the stock market to give comparatively better returns," Kejriwal said.

Besides, MSCI Barra's emerging market index, which includes all the developing world markets, has also given negative returns to foreign investors to the tune of 16 per cent so far this year.

In the past three months also, Indian stocks have performed badly in comparison to other BRIC markets with a negative return of 28 per cent. In comparison, stocks in China have dropped 15.43 per cent, while those in Brazil and Russia have slipped 7.52 per cent and one per cent respectively, the MSCI indices data revealed.

In July so far, Chinese stocks have been able to provide investors with positive return of over 2 per cent and Indian equities have given marginal negative returns of 0.06 per cent. However, Brazil underperformed with negative returns of over 9 per cent and 7.50 per cent by Russia in July so far.

MSCI Barra is a leading provider of investment decision support tools to investment institutions worldwide.