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India and the gold mines on the red carpet

15 July 2014, La Libre Belgique

During the first six months of 2014, Indian equities and gold mines provided the best performance among the funds sold in Belgium. Whereas India was listed among the “five fragile economies” by forecasters at the beginning of the year, the country has succeeded in pulling off a remarkable turnaround. “Like all of the stock markets in the emerging countries, the Indian market was given a rough ride in 2013 following the remarks made by Bernanke and his intention to gradually taper off his programme of quantitative easing,” explains Bernard Keppenne, Chief Economist at CBC Bank. “But in addition to this factor from the outside, India internally was having to cope with a significant slowdown in its growth, as well as a record trading deficit and a fall in its currency.”

The election results and the appointment of Raghuram Rajan as the new governor of the Indian central bank have since enabled the country to put the required reforms in motion. Measures were quickly taken to stifle the rise in inflation. Today, the Bombay Stock Exchange has been one of the leading stock markets since the beginning of this year. “With the election of Narendra Modi to the head of the government, structural reforms should be put in place that will favour the market economy and hence give a kick start to the country’s growth,” notes Victor Zwart, CEO of Wealtheon in Brussels. “Investors have clearly reacted positively to the election results, but not everything has to do with what happened in the election. For the past few months, the country has also been very busy fighting high inflation, the fall in the rupee and the current account deficit.”

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