Stock market performance is supposed to dovetail with industrial growth. When one does well so, in theory, does the other – witness the outperformance of US equities during the economically golden late 1990s. Likewise, stock market crashes are expected to stem from, or herald, broader economic recession.
That doesn’t always happen in practice, particularly in fast-growing emerging markets. India’s Sensex, a weighted index covering the largest 30 Mumbai-listed stocks, gained 28% in 2012, while the Indian economy sputtered.
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