How the Two Markets Were Compared
To understand the long-term movement of both markets, the top 200 stocks of Nifty were compared with the top 300 stocks of China. The comparison was done in dollar terms so that currency changes did not affect the result. A simple ratio chart was created by dividing Nifty 200 by China 300 (see the image below). This helps show which market is doing better at any point in time.
What the Chart Shows About Past Years
The ratio made a major high in 2008. After that, the chart fell sharply and did not cross that 2008 high for many years. From 2008 to 2021, the ratio stayed below that level. This means Nifty did not outperform China during this long period. If it had outperformed, the chart would have kept moving up. So, for many years, China held a stronger position in this comparison.
The Change After 2021
After 2021, things began to shift. The ratio finally crossed the old high, showing that Nifty started outperforming China. This trend continued till mid-2024. After that point, China’s performance started improving again. There is a chance that the ratio may retest lower levels if China continues to show strength. Later, Nifty may again pick up if the trend turns upward.
How Global Funds React to These Moves
Global funds that invest in both India and China watch this trend very closely. For almost the past one to one-and-a-half years, China has been showing slightly better performance. Because of this, more global money may be flowing towards China for now. But as soon as the ratio starts moving up again, the same funds may shift focus back to India. This has happened before, like after the 2009 slowdown when interest in India grew strongly again.
Why This Trend Matters
The movement between these two markets shows how global liquidity keeps changing direction. If foreign investors are selling in India right now, it may simply mean they are finding better chances in China at the moment. But once the trend turns upward again, the flow may return to Nifty. This simple ratio helps understand how the relative strength between the two markets keeps shifting over time.
Final Thought
The performance gap between Nifty and China tells us a lot about global interest and investment flow. Watching this trend can help understand where large funds may move next and how both markets keep taking turns in leading the performance race.
