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Nazim Khan is the site editor for Morningstar India.

A comparison of stockmarket performances in various major countries throws up an interesting insight: Indian stocks typically rise more than peers in a bull market and fall heavily in a down year.

Consider these statistics. Between 2003 and 2007, a period that symbolized a major run for stocks globally, the S&P 500 in the United States, UK's FTSE 100, Japan's Nikkei and China's Shanghai Composite gained about 67 per cent, 64 per cent, 78 per cent and 288 per cent (in absolute terms), respectively. India's benchmark Sensex jumped 500 per cent in the same period.

The story reversed in 2008 and through the year, the S&P 500, FTSE and Nikkei fell 38 per cent, 31 per cent and 42 per cent, respectively. The Indian market, along with its Chinese peer, was among the worst hit. The Sensex lost 52 per cent, the Shanghai Composite slumped 65 per cent.

Equities bottomed out globally in early 2009 and climbed until about the end of 2010. In the two-year period, the returns for the above-mentioned indexes were: 39 per cent, 33 per cent, 15 per cent, 54 per cent and 113 per cent for the S&P 500, FTSE, Nikkei, Shanghai Composite and Sensex, respectively.

Stocks across the globe have had a tough 2011 and it shouldn't surprise anyone that the Indian market is among the worst performers of the year, losing about 21 per cent until November's end.

Concerns plaguing Indian equities

Looking past the numbers, at the start of the year, it was clear Indian equities were richly valued, trading at a higher-than-historical-average trailing price-to-earnings ratio.

At the global level, the European crisis that manifested itself in the latter part of the year and a clear sign of an economic slowdown across the globe weighed on stocks.

But closer to home, it was also concerns relating to stubbornly high inflation, led by rising commodity prices and supply-side bottle-necks, governance issues - several high-ranking policymakers and executives were jailed in an estimated $35-billion spectrum scam - and a tightening monetary policy to combat high inflation (the Reserve Bank of India hiked key rates a staggering 13 times since 2010) that weighed on equities.

Where do things stand today? After a tough battle, inflation is finally showing signs of coming off, the government is cleaning up its act, allowing the federal investigative agency to go after its own administration officials named in the scandal, and has fast-tracked some much-needed economic reforms (at the time of writing, the parliament was heatedly debating allowing foreign retailers to set up store in the country).

On the other hand, the central bank's hawkish stance, while largely failing to tackle inflation, took a toll on economic growth. Gross domestic product growth in the previous quarter fell to 6.9 per cent, compared to 8.4 per cent in the year-ago quarter.