Fund manager Abhay Agarwal is experiencing a surge in inquiries from international investors with a newfound interest in India’s stock market.
The market value of listed companies in India surpassed $4 trillion in late November, reaching record highs.
The National Stock Exchange of India (NSE) has become the seventh-largest bourse globally, surpassing Hong Kong.
Agarwal notes the growing excitement about India’s market and observes a shift in investor interest from short-term to long-term perspectives.
Investors are curious about India’s potential returns, reminiscent of China’s performance in the early 2000s.
India’s benchmark indices, Sensex and Nifty 50, have experienced significant growth this year, climbing over 16% and 17%, respectively.
The country has also witnessed a boom in Initial Public Offerings (IPOs), with 150 listings in the first nine months of 2023.
This surge in India’s stock market reflects the strength and potential of the world’s fastest-growing major economy.
The International Monetary Fund predicts India’s growth at 6.3%, and some economists estimate it could be closer to 7%.
This positive sentiment contrasts sharply with concerns over China’s weak consumer demand and a prolonged real estate crisis.
The divergence in growth between India and China becomes crucial in the battle for emerging market investments.
India’s economy shows resilience, with less economic linkage to China’s end demand, making it less sensitive to global economic risks.
Nomura highlights India as less exposed to a global trade slowdown, potentially serving as a counter-weight to North Asia amid a global economic downturn.
The country is considered a promising medium-term business destination, attracting Japanese manufacturers and diversifying their supply chains away from China.
Despite India’s recent economic success, foreign investors might stay cautious in the first half of 2024 due to the upcoming general election.
Election-related uncertainty and a challenging global macro environment could temporarily weaken foreign flows.
However, analysts anticipate increased foreign investment post-election, hoping for political stability with Prime Minister Narendra Modi’s potential victory.
Critics, however, caution against relying solely on the stock market’s buoyancy to gauge India’s overall economic health.
They point out disparities, with large firms benefiting while small and informal sectors struggle.
Job creation and inclusive growth continue to challenge India’s economic landscape.
