Will India Continue to Outperform?

Many Investment Managers expect India to post the largest real GDP growth globally in 2023. But the Indian market is expensive despite strong fundamentals.

Jan 2023

Equity

Indian Stock Market becomes the China + 1

Many Investment Managers today forecast that India will have the largest Real GDP growth globally in both 2022 and 2023 (~7% and ~6% seems to be the consensus, respectively). However, there are concerns that despite strong company fundamentals, valuations are high and it may be time to go neutral or underweight the Indian stock market.

Such a tactical decision does not diminish the long term structural attractiveness of Indian Equities. The economy remains one fifth the size of China and is starting to be recognised as the China + 1 play. The demographics are a story in themselves with so much potential, given the economy's stage of development.

India represents a market with enormous opportunities. And the global institutional world is starting to wake up to these possibilities. We think this may explain why professional investor traffic flowing inside RFPnetworks to India Equity research is spiking.

Emerging Market Equity

India – The Valuation Conundrum for Long-Term Investors

Mondrian Investment Partners

Mondrian on RFPnetworks Emerging Market Equity Research Feed depicted by Taj Mahal

In what is turning out to be a challenging year for global stock market returns, the performance of India stands out within the emerging market asset class and global stock markets. In the nine months through the end of September, MSCI India has fallen by 9.7%, compared to the Emerging Markets index that is down 27.2%. Within Asia, only Indonesia and Thailand have performed better than India this year. This builds on a base of very strong long term returns, with India having outpaced the EM index over most time frames. The result has been that the weighting of India within the MSCI Emerging Markets index has increased further, reaching an all-time high of 15.3% by the end of the third quarter. As a result, India’s weighting has eclipsed both Taiwan and Korea, becoming second only in size now to China.

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