The Indian stock market is booming, and there is evidence that this nation of more than one billion people could continue to grow economically. That spells good news for exchange traded funds (ETFs) that track India’s economy.
Although the Indian stock market fell along with other world markets during last year’s crash, it actually never tested its multi-year lows, reports Karim Rahemtulla of Investment U. As recently as Monday, it hit a 25-month high.
Flush with cash, Indian companies are not only investing in India’s young export market, but are in the midst of a multi-hundred billion-dollar infrastructure boom. [How to Choose Emerging Market ETFs.]
According to Karim, a few fundamental factors can explain India’s torrid growth:
- India’s strength comes from its huge internal consumption levels. This, to some degree, insulates India’s economy from global events.
- With such a huge population, India is better poised for economic growth compared to other emerging markets.
- India is not heavily reliant on its exports for growth. [Strategies for Playing the BRICs.]
- India’s middle class is larger than the entire population of the United States, which allows it to generate a tremendous amount of economic activity without issues of trade balance.
- Companies tend to thrive without threat of international competition because of India’s protectionist business nature.
It’s no wonder the International Monetary Fund is bullish on India. [Why the IMF is Bullish on India’s ETFs.]
For more information on India, visit our India category.
- iShares S&P India Nifty 50 (NASDAQ: INDY)
- WisdomTree India Earnings Fund (NYSEArca: EPI)
- PowerShares India Portfolio (NYSEArca: PIN)
Sumin Kim 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.