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One of my friend jokingly remarks that some things in life need to be accepted whether they make sense or not. One of those things he mentions is the dependency between Nifty and S&P500 . One often sees that S&P500 movements and Nifty movements are correlated for no reason. Let me to put some numbers to the angrezi,

Cor(NIFTY, S&P Returns)

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I wonder how these numbers will look in the coming 5 years, now that US is getting in to a never seen before kind of recession.

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BRIC, a term which has got absorbed everywhere after an Indian economist wrote a paper about how BRIC economies will dominate the world. However correlation with US is in the order BIRC. Basic number crunching on returns show that Correlation of Brazil > India > Russia > China returns with US returns

_Caveat : Correlation might not be a good measure. It makes sense only when the joint distribution of the variables is elliptic. However as long as I need to get some idea of the trend , it is fine.
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  • 20% of Nifty Index is made of IT Companies.Exports slowdown will hit Nifty.
  • 40% of Indian exports are commodities, Jewelry contributes 16% , Garments contribute 6% to the entire exports 20% of Indian Commodity exports is to US
  • In 2001-02, Indian public sector made a loss of $9.5B . However by 2004-05 , it started making a profit of $16B
  • Current Indian Savings rate ~ 30%. On a GDP of trillion dollars, one can see that about $300B gets pumped in to the economy via savings.
  • Much hyped monsoon risk is starting to die down. % Agri contribution to GDP $ 18% and and is predicted to go down to 10% by 2010.
  • Bank Deposits / GDP ratio = 55% . It is one of the lowest amongst the developing countries!! . This obviously means, Equity based investment / Capital markets based money inflow has been a great contributor to the overall growth.