India exchange traded funds have been laggards relative to the broader emerging markets complex this year, but have recently started showing signs of shedding that status. For example, the PowerShares India Portfolio (NYSEArca: PIN) is up 2.4% over the past month.
Some market observers believe Indian stocks offer rebound potential. Over the short-term, India has benefited from cheap energy prices as the country is one of the largest importers of crude oil. Looking further out, economic reforms, including more business-friendly and growth-oriented policies, could help support growth over the medium-term.
Specifically, many argue that India’s favorable demographics will help support a growing economy. Over a third of India’s 1.3 billion people are between the ages of 15 and 34 with a median age of 27, compared to 37 in China, 38 in the U.S., 41 in developed Europe and 46 in Japan. India’s population is also expected to grow by 1.4%, compared to China’s 0.5% and 0.9% in the U.S.
PIN’s underlying index “is designed to replicate the Indian equity markets as a whole, through a group of 50 Indian stocks selected from a universe of the largest companies listed on two major Indian exchanges. The India Index has 50 constituents, spread among the following sectors: Information Technology, Health Services, Financial Services, Heavy Industry, Consumer Products and Other,” according to PowerShares.
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India ETFs, including PIN and rivals such as the iShares India 50 ETF (NasdaqGM: INDY) and the EGShares India Consumer ETF (NYSEArca: INCO), soared earlier this year when Prime Minister Narendra Modi proposed a budget of 877.7 billion rupees, or $12.9 billion, on rural programs such as expanding irrigation projects, crop insurance and village roads.