Tracking Indian Markets 101

Indices

Nifty50: weighted average of the 50 largest companies listed in the National Stock Exchange of India by market capitalization

BSE Sensex: free-float market-weighted stock market index of 30 established companies on the Bombay Stock Exchange

Nifty SmallCap 100: consists of 100 small yet capitalized businesses representing about 5% of the free-float market capitalization listed on the National Stock Exchange of India

India VIX: similar to the regular VIX, a measure of fear and short-term fluctuations in the overall market. Calculated using the underlying indices’ option prices

ETFs

FLIN: fund with exposure to large and mid-cap companies in India with total assets of $1.25B that is passively managed 

MSCI EM: index with large and mid-cap exposure across 24 different countries and 1,373 constituents total. Covers approximately 85% of the free-float adjusted market capitalization in each country

MSCI India: an index that covers 85% of the Indian equity universe, featuring 136 constituents in mostly large and mid-cap segments. 

Commodities

Gold: India is the world’s 2nd largest consumer of gold after China. Much of this demand is met through imports and recycling domestic bullion, thus import duties and tariffs play a large role in determining domestic gold prices. 

Coal: the fuel accounts for 55% of the country’s energy consumption and is the largest contributor to railway freight. 

The Rupee and Its Drivers

Rates: Like most EM countries, the Rupee is driven heavily by US rates and overall risk appetite. As risk appetite grows, EM assets (and currencies) see more inflows and vice versa.

Additionally, the differential between US rates and Indian rates causes inflows since when Indian rates are lower than US and European rates, the Rupee is shorted to fund other investments. When Indian rates are higher, it can be used to earn carry thus causing the Rupee to appreciate.