Diversification In An Emerging Market: A Closer Look At The Indian Stock Market

Abstract

We find that the Indian stock market generated returns comparable to those of the U.S. stock market during the period January 1991 to July 2005.  We also find that the Indian stock market produced returns substantially higher than U.S. equity returns during various sub-periods when the U.S. market declined.  We demonstrate that the Indian stock market presents important return and diversification benefits to U.S. investors.