India ETFs Rise on Reform, Goldman Bulls
December 11th at 5:59am by Tom Lydon
Shares and exchange traded funds focused on India have been rallying on bullish comments from Goldman Sachs and solid fundamentals falling into place. There are various reasons that India’s stock market has plenty of room to run amid current market uncertainty.
“Despite being up 20%-plus on a year-to-date basis, the MSCI India Index is currently trading slightly below its average five-year trailing 12-month P/E ratio. Looking forward, we think there are a number of catalysts that may drive the market higher in the short and medium term,” Patricia Oey wrote for Morningstar. [Foreign Investment Bolsters India ETFs]
Goldman Sachs recently forecast a GDP growth rate of 6.5% for India in 2013 as the demand for global and domestic reforms are favorable for Indian markets. Further bolstering India’s stock market will be the lower oil prices that investors are seeing lately. The lack of control for reform within India’s infrastructure is no more as it has become evident that upgrades are necessary for economic activity to thrive, reports Benzinga. [India's ETFs Rise on Interest Rate Cuts]
ETFs that have rallied on Goldman Sach’s comments include the EGShares India Infrastructure ETF (NYSEArca: INXX) which has gained about 3%. The iShares S&P India Nifty Fifty Index Fund (NYSEArca: INDY) has gained 3.6%, while the PowerShares India Portfolio (NYSEArca: PIN) is up 2.7%. [Infrastructure ETFs for the Long Haul]
Another catalyst to Indian focused ETFs has been the recent announcement by the government. India’s Prime Minister Manmohan Singh received support from the parliament’s lower house for his plan to allow supermarkets with a foreign majority ownership to operate in India, reports Oey. This plan was originally introduced in 2011, but was retracted after protests. Indian markets fell lower soon after the reforms were off the table.
The country of India still faces challenges such as inflationary pressure and another pause before any reform agenda is carried out. Should a populist stance reign, foreign investment would slowdown.
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.