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Indian stocks hit record high.

 

India’s stock market reached an all-time high this month as robust economic growth, financial reforms and a pro-business government have drawn greater interest from global fund managers.

The Nifty 50 is up 7 per cent this year compared with MSCI’s broad index tracking emerging market stocks in local currency, which is down 16 per cent.

The equity benchmark’s new peak at the start of this month comes as multinational companies increasingly turn to India as an alternative to China for international expansion and to gain access to a fast-expanding group of middle-income consumers.

Due to Beijing’s strict zero-Covid policy, supply chain disruptions in China have boosted India’s appeal to global businesses.

According to the consultancy Capital Economics, real GDP is forecast to increase by an average of 6 per cent a year, faster than any other major economy.

Meanwhile, the rapid adoption of smartphones in India, alongside a government-backed digital payments network, is accelerating the country’s shift towards a cashless society. The pandemic accelerated this trend.

The number of smartphone users in India will reach 732mn this year, more than double the 300mn registered in 2017, according to Newzoo, the data provider.

According to the internet and Mobile Association of India, active internet users are expected to rise from 692mn in 2021 to 900mn by 2025.

«The impact of smartphones on people’s lives is profound,» said Kevin Carter, a specialist emerging market investor who has designed an India internet and e-commerce ETF, known as INQQ, to tap into the country’s technology ecosystem.

«There is plenty of interesting innovation across India’s pharmaceutical industry where there is a huge pool of researchers working, but it is essential to find trustworthy partners,» said Glen Finegan, portfolio manager at Skerryvore Asset Management.

Trading on a 12-month forward price-earnings multiple of 21 times, India ranks as the second most highly valued equity market worldwide behind New Zealand, according to Société Générale.

The French bank expects India’s stock market to deliver earnings per share growth of 13.2 per cent this year, rising to 19.6 per cent in 2023.

However, high company valuations have prompted some position trimming, with net withdrawals by foreign institutional investors climbing to $17.9bn this year, compared with the inflows of $3.8bn registered over 2021, according to data from CLSA, the brokerage.

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Comments

  1. Anonymous6 December 2022 at 19:54

    China is making India stronger the longer they keep up this zero-Covid situation. India was already on an upward trajectory but the fact that China is stumbling right now will help it grow even faster.

    ReplyDelete
    Replies
    1. Jim6 December 2022 at 20:28

      India is also taking advantage of cheaper oil from Russia which is and will make it even stronger.

      Delete

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