Market reality counts in India's rubbery figures
Any investment analyst who has ever visited India is acquainted with the sense of complete bafflement that quickly arises from a series of meetings with either companies or public officials.
The companies are adept at spinning stories about how well they are either doing or soon will be doing, ignoring all frequent disappointments of the past as anomalies from which they are unlikely to suffer again.
Public officials conduct meetings with a weighty pontifical air calculated to make visitors feel honoured that they have been allowed to meet such important persons and present selected snippets of information to convey the official line that things are soon to turn for the better.
Throughout it all the heavy hand of political speculation intrudes in every conversation to make uncertain again anything that may temporarily have seemed to be certain. Difference of opinion on even small matters is to be found at every meeting and almost seems prized as a way of conferring intellectual standing.
A day or two of this and you thirst as you do nowhere else for the hard numbers that should be found from official statistical sources.
But you remain thirsty. There is an acute shortage of reliable figures from official sources. What is available is either reams of trivial data, figures that are more than a year out of date or statistics which everyone has different grounds for disputing.
Not surprisingly, most investment commentaries on India tell you that it could go up or it could go down or it could go round and round but it all depends and we are cautiously optimistic.
This commentary today has nothing to break the mould. All it offers is yet another of those baffling conundrums to rob certainty from those who may think they finally see their way.
The official figures on which everyone agrees do not look good. Industrial production is down, foreign trade is collapsing, the trade deficit is widening steeply, the government budget deficit even more steeply, inflation is turning up again, market interest rates are beginning to rise, analysts are cutting next year's corporate earnings forecasts and the latest spat with Pakistan has soured foreign sentiment.
Yet, while the BSE Stock Exchange has suffered an up and down ride because of it, Indian share prices are consistently doing better than the average of East Asian countries.
Since the beginning of last year, the stock market has outperformed the average of East Asia excluding Japan by more than 100 per cent. In other words you would have done more than twice as well over this period in India as in the average of other Asian markets and the consistency of the outperformance has been a notable one as the chart shows.
Of course, this outperformance has been more a case of the rest of Asia falling than of India rising. What is baffling here, however, is that while most East Asian economies now show clear signs of recovering, India's economic fundamentals have taken a turn for the worse and yet the outperformance continues.
They've made a mess of things in many ways in India but market performance is hard fact and it says that they must be doing something right.