The world’s biggest stock market, the Indian stock market has been undergoing a remarkable transformation in recent years.
The rupee has risen from less than half a cent to more than 60 per cent in the last five years and is up more than 30 per cent this year.
The rupee was at nearly 90 per cent of its peak of Rs 4,200 at the end of last year.
It is now close to a record high of Rs 6,000.
However, it has fallen more than 70 per cent against the dollar over the last year, hitting the lowest level since the 2008 financial crisis.
The US dollar has appreciated nearly 80 per cent.
As per figures from Bloomberg, India’s biggest index fund, Sensex, has increased its allocation to the rupee by almost 3 per cent since the end, and the benchmark 10-year rupee note has surged by nearly 1 per cent to nearly 9,000 paise per one US dollar.
It has also jumped nearly 30 per in the dollar against the euro, and gained almost 70 per in British pounds.
The biggest gainers in the rupees’ value over the past three years have been Indian equities.
It gained 7 per cent over the period.
The benchmark Sensex rose almost 10 per cent as well, from 4,100 to 5,700 paise in the period to end.
The S&P 500, which is traded on the London-based FTSE 100 index, has also risen by more than 10 per per cent, rising from around 1,600 to 2,700 in the same period.
The Sensex is also the largest market in India to trade in gold, with its bullion-backed portfolio comprising the ruis and dollars.
Gold has been the largest growth driver for the ruas share of India’s stock market.
According to the Bloomberg report, the ruats bullion holdings in India jumped nearly 100 per cent between 2016 and 2017.
Gold accounted for almost 45 per cent (Rs 2,000 crore) of Indias total gold imports in the first quarter of 2018, compared with about 27 per cent for the dollar, according to the Ministry of Finance.
The stock market also benefited from a drop in inflationary pressures that began in 2016, said Dr Anuj Gogia, managing director of S&p Global Insight, in an interview.
He noted that the ruans inflation rate is currently around 0.6 per cent and the ruashions inflation is at 1.4 per cent or less.
Gogia added that the stock market’s exposure to inflation is not as bad as it might have been earlier, as there is a “significant and very real reduction in the probability of inflationary shocks”.
India is the world’s third-largest gold importer after the US and China.
In 2018, the country’s economy expanded by 8.7 per cent compared to 7.4 percent in 2017.
Inflation has also slowed down, though it is still above the global average of 2.7 percent.