Source: Snowball APP, Author: Castrol Fortune-HW, (
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Dr. Tan Huaqing, chief macro analyst of Castor Fortune
—— India is so big that it cannot be ignored, and the Indian stock market may not be ignored.
1. The Indian stock market does not grow up with the golden key
Population dividends and scientific and technological progress constitute the basis of India's long -term economic growth.India has a huge young population, and the level of education has continued to improve. It is firmly reforming in the direction of marketization. The Indian economy is expected to achieve long -term development.But even so, the Indian stock market is more special.No matter how beautiful the economic prospects, it seems difficult to support it for 9 years (as of July 31, 2024).This has set a record of continuous rising annual rising in ordinary stock indexes in the history of human beings.
Because the rising time is too long, people may have become accustomed to the rise of the Indian stock market, and even have a wrong impression. It seems that the Indian stock market is a long cattle.
But it does not grow up with the golden key.Friends who are familiar with the economic development history of all countries in the world know that economic growth is scarce, and economic growth is the norm.In the past 300 years, there are about 40 economies that have truly separated from poverty traps and middle -income traps, and more than 160 economics are not among the poverty traps, but in the middle income trap.
Looking at the warfire in the Middle East and Africa, and looking at the tortured Latin America, the long -term stable and sustainable growth of the economy is the long -term harmony between the time and the people. Most economies cannot meet these conditions.
When we look at the Indian stock market with a historical perspective, we will find that the Indian stock market, just like the Indian economy, is not born or long.
India for a long time is synonymous with poverty and backwardness.The Nobel Prize winner of Economics Lucas appealed in a lecture at Marshall University in Cambridge in 1985: "Can the Indian government take some actions to guide India's economy to grow like Indonesia or Egypt?The reason has led to the "essence" of India?
Like the Indian economy, before 2000, the Indian stock market was not outstanding. The volatility was greater than the trend, and it repeatedly shocked for ten years.
The Indian stock market and U.S. stocks also began in 2001. After 10 years of mediocrity, after the financial crisis, they got rid of the mediocre and entered the great bull market stage in history.
History is continuous. India is not understood before 2000, and India may not be understood after 2000, whether the economy or the stock market.
This report starts with you with everyone. Looking back at India's 1990s, that is also an exciting age!
2. The two stages of the Indian stock market
Figure 1 Comparison of the trend of the Indian stock index and the trend
Data source: Wind.The statistical interval is December 1990-July 2024
It can be seen from Figure 1 that from around 1999, the Indian stock indexes are highly related to the trend. When the S & P 500 appears in the big bear market, the Bear market will often appear in India and Mumbai 30.
Table 1 India Mumbai 30 and historical risk returns characteristics
Data source: Wind.The statistical interval is January 1, 1991-July 10, 2024.Note: No exchange rate is considered.The above is only the reference and use of investors to propagate and educate, and does not constitute any income commitment or guarantee. History does not indicate future performance, the market is risky, and investment needs to be cautious.
Back to 2000, the difference between the Indian stock market and the difference at a glance.
Figure 2 The Indian stock index and the Indian stock index and the 1990s
Data source: Wind.The statistical interval is December 1990-August 2020
What happened to India's economy and stock market in the 1990s, this was what we were going to explore.
3. Indian reform in the 1990s
In fact, in 1991, the Laobo government announced that the market -oriented reform was in the economic crisis, including the decline in industrial production and the international income and expenditure crisis.Market -oriented reforms include reducing the administrative license of market access, further relaxation of market access, reducing administrative approval, reducing foreign exchange intervention, and implementing foreign exchange depreciation.The reform of the banking system and the market -oriented capital market of capital has also been carried out simultaneously.Reduce administrative intervention, relax market access, reduce the deposit reserve ratio and flow ratio, and suspend the nationalization of banks to implement measures one after another.
It takes time to solve the problem from crisis to reform, which takes about 10 years for India.From a macroeconomic perspective, the main result of the reform is to suppress the non -performing loans of the banking system, and the capital adequacy ratio of the banking system has been significantly improved.The banking system can lightly support economic development.
Figure 3 The non -performing loans of the Indian bank system continued to rise until around 2000
Figure 4 The credit of the Indian Banking System to bottom around 2000
Table 2 The net profit of the Indian Banking System
Figure 3, Figure 4, and Table 2, from the proportion of non -performing assets and the performance of the net profit of the banking system, all show that the Indian banking system began to rejuvenate around 2000, and can also prove it through the net profit performance of the banking system.
The health process of the Indian bank system has continued until 2008-2009.Although the global financial crisis broke out internationally, India's banking system benefited from the early reforms and passed the crisis steadily.
India's market -oriented reform has also affected the international revenue and expenditure field.The strict restrictions on imports curb the enthusiasm of foreign companies to invest in India.With the significant decrease in imports and foreign exchange controls, foreign direct investment and securities portfolio investment have continued to flow sharply.
India's international revenue and expenditure situation has been significantly improved, and international foreign exchange reserves have been gradually formed.After the mid -1990s, the issue of income and expenditure that has troubled India for 30 years has completely become history.
Figure 5 After the mid -1990s, India's foreign exchange reserves increased rapidly
Together with the self -sufficient food that has been basically achieved in the 1980s.It can be said that the reform of the 1990s, together with the "green revolution" of the 1980s that aims to achieve the self -sufficient food of food, has got rid of a structural crisis.
Figure 6 India's grain self -sufficiency rate has exceeded 100%in 2000
Source: REN, Y., Li, Z., Wang, Y., & ZHANG, T.. (2020). Development and Prospect of Food Security Coopration in the Brics Countries. Sustainability, 12 (5), 2 (5), 2 (5). 125.
Economic reform has removed the obstacles of economic development, and India's economic growth has also improved to a certain extent.It is not necessarily the economy to map to the stock market.
The capital market reform laid the foundation for the Indian stock market in the end.The history of the Indian capital market can be traced back to the establishment of the Meng Buy Exchange in 1875. It has a history of more than 130 years. It was first established by the British help.After independence, India's stock market was generally strictly supervised by the government and developed slowly.Enterprise issuance of stock rights (scale, price, etc.) is determined by the government. Institutional investors are mainly domestic institutions, and the quality of information disclosure is not high; the clearing system is low; risk management and investor protection mechanisms are not complete.In 1992, with the reform of liberalization, India took a number of measures to reform and strengthen supervision to the capital market, and gradually enriched the derivative market to enhance the stability of the stock market.
In 1992, the Indian stock market also quickly carried out the registration system.India mainly has two major national exchanges -the Mumbai Stock Exchange (BSE) and the Indian State Stock Exchange (NSE), which were established in 1875 and 1992, respectively. The representative indexes were the Sensex30 index and the NIFTY50 index.From the perspective of operation, the Indian stock market maintained a delisting rate of about 2.5%as a whole, promoting the balance of investment and financing in the stock market and long -term stable survival of the fittest.According to the statistics of Shen Wanhongyuan Securities, from 1997 to 2020, the total number of IPOs across India was less than a quarter from 1992-1996.However, a total of 2,869 companies delisted, accounting for 54%, and an average of 106 years.
Figure 7 Indian stock market maintains a high delisting rate
After delisting, the Indian Securities Regulatory Commission asked the company to repurchase the stocks in the hands of shareholders at a fair price.There have been scandals in the manipulation market during this period.After 1996, listed companies need to accept stricter supervision and better information disclosure.After long -term development, India has a relatively complete corporate information disclosure system, more powerful property rights protection measures, and a more friendly judicial system for investors.
Fourth, the Indian stock market after eliminating obstacles
In -depth details of history, we realize that the Indian stock market is either born or long.Behind the long cow is the reform of the blade inward.In the 1990s, the Indian stock market experienced the pain of reform like the Indian economy, and also experienced the test of the stock market opening.
For a long time.Ten years of grinding a sword.After the market -oriented reform of about ten years, the international income and expenditure problem that has long plagued India's economic stable operation has ended, and the non -performing problems and losses of banks have ended.India's economic reform has achieved remarkable results.
Ten years of reform are also ten years of growth.The banking system gets rid of the huge non -performing assets, rejuvenates its vitality, and has the ability to provide financial resources for economic expansion.The stretched international income and expenditure issues are gone.The continuous flow of foreign capital replaced the borrowing of overseas.During the same period, India's stock market reform was also carried out simultaneously. The implementation of the registration system, strict delisting, investor protection system, and firm opening to foreign capital, the reform of the capital market and the economic level reform complement each other.
The seeds of reform gradually blossomed after ten years.Since 2000, in addition to the influence of the global capital market turbulent and the global economic and financial crisis, the Indian stock market has maintained the characteristics of long cattle.
If the reform of the 1990s has greatly increased India's lower limit, then Modi reform since 2014 has increasingly touched the problem of the upper limit of the Indian economy, including land and labor.If these issues are not reforming, maybe not like those banking problems and international income and expenditure problems in the 1990sMumbai Stock Exchange. When it comes to reorganization, it will be as serious as a crisis, but it is indeed a factor restricting the Indian economy on the next level.
From 30 points to 85 points, it depends on whether he can reach 90 points.This is the current problem facing India, we wait and see!
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