Excellent article on the divergence of bull markets and ongoing rally in the US and India
The US is a historic anomaly. It’s all about one big sector — tech — and within that sector, the Magnificent Seven. In the last year, the Magnificent Seven are up 80%, and account for more than half of all US stock market gains. Meanwhile, the median stock, out of the 4,700 traded in the US, is down. It’s a tale of unusually concentrated returns, further inflamed by the mania for artificial intelligence, which is seen as a boon mainly for the biggest companies.
India’s bull market is, by contrast, a broad-based classic. Gains are much more evenly distributed across sectors, and no sector accounted for even a quarter of total returns over the past year. While large cap stocks are gaining in the country, medium and small caps have gained even more; the median stock is up more than 40 per cent.
Foreign portfolio investors now own less than 40 per cent of the stocks that are available for public trading, down from 60 per cent a decade ago.
Over the past two decades, the number of publicly listed companies in India multiplied by a factor of nearly five to 2,800, even as it was falling by a quarter to 4,700 in the US, where oligopolies began to exert a stronger grip on most industries, not just tech.
Remarkably, 180 companies in India have tripled in value this decade and now have a market capitalisation of $1bn or more. That is more than in any other country, including the US.
Most bull markets see excesses build up over time; in India, they are visible in subsets of the growing retail investor class. In 2023, Indians purchased more than 85bn options, or nearly eight times the volume in the US, and on average held those contracts for less than half an hour. Amid the frenzy, regulators ordered trading platforms to open with a warning that 90 per cent of retail investors are losing money on these trades.
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