So far this year, there are signs of improvement. Foreign fund managers weren't very venturesome early in the year. Peregrine Capital India, a Bombay brokerage firm, predicts the index will hit 5000, a historic high. That will make India too cheap for foreign fund managers to ignore, he argues. But the future of India's markets will depend on the pace of reform.
Tough decisions stand in the way, and that's where politics continues to rule the economy.
A hung Parliament means that coalition governments are here to stay. There's a consensus not to reverse liberalization, but questions remain about how fast reform will roll on. Still, the ride is worth it, say U.S. fund managers, who are attracted to India as a hedge. It behaves like nowhere else in the world. Inc. All Rights Reserved.