If you are looking for a fast-growing emerging market to invest in, you might want to look at India. This might come as a surprise because India, for the past several years, has underperformed. The bourse had issues due to increased inflation as wells as regulatory issues that tended to discourage investment. Well, that has all changed since the election of the BJP and Prime Minister Narendra Modi. The global financial market is excited about Mr. Modi and the new BJP government. In fact, if you invested in the
The global financial market is excited about Mr. Modi and the new BJP government. In fact, if you invested in the exchange traded fund focused on India, Wisdomtree India Earnings ETF, you would have gained 10.6% year-to-date. That is how hot the Indian stock market has become under the BJP. This should not be a surprise. When the BJP was last in power several years back, the Indian stock market was booming. Expect more growth in the short-term future. Why? The BJP has been rolling out a raft of pro-market and pro-growth policies. For example, the government is trying to pass a law that will make it easier to acquire land for huge industrial projects. The government is also trying to raise the foreign ownership and investment limits in India’s insurance sector. Finally, the new administration is trying to kick-start the energy sector by allowing for the reauctioning of coal mining licenses. Another key factor that has been fueling the rally in Indian stocks lately is the recent interest rate cut by the central bank. Put all these factors together, and India looks like it should have a bright short-term to mid-term future as far as its equities market is concerned. However, I don’t want to paint a picture that there are no clouds in the horizon. India still has to operate in a global economy where global growth rates are declining. Global demand is softer and may negatively impact the Indian stock market.
Expect more growth in the short-term future. Why? The BJP has been rolling out a raft of pro-market and pro-growth policies. For example, the government is trying to pass a law that will make it easier to acquire land for huge industrial projects. The government is also trying to raise the foreign ownership and investment limits in India’s insurance sector. Finally, the new administration is trying to kick-start the energy sector by allowing for the reauctioning of coal mining licenses. Another key factor that has been fueling the rally in Indian stocks lately is the recent interest rate cut by the central bank.
Put all these factors together, and India looks like it should have a bright short-term to mid-term future as far as its equities market is concerned. However, I don’t want to paint a picture that there are no clouds in the horizon. India still has to operate in a global economy where global growth rates are declining. Global demand is softer and may negatively impact the Indian stock market.
