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India's Correlation With Global Markets Approaches 10-Year Low

  • Disconnect means India provides very useful ballast: Templeton
  • Indian bonds less correlated to world markets than its stocks
Shoppers In Jammu's Raghunath Market as State Bank of India is Betting Against the Street
Photographer: Dhiraj Singh/Bloomberg

A shrinking correlation between financial markets in India and those in the rest of the world is one reason to buy its assets.

The weighted average correlation of India’s currency, bonds and stocks with those in other global economies fell to 0.32 last month, approaching a more than 10-year low of 0.29 set in November. The reading was as high as 0.68 in 2010, data compiled by Bloomberg show. Global investment managers say this divergence provides them with an asset class that can smooth out returns in their portfolios.