The Indian Budget Road Map

Staying Positive on India

The Indian markets have been performing strongly on the prospects of meaningful change and improvements in the growth climate brought on by the election of Prime Minister Narendra Modi. While this budget lacked a “big bang” reform, there are many positive developments that should support India’s equity markets.

WisdomTree’s India Earnings Fund (EPI), which provides broad exposure to the Indian markets, has its biggest exposure, more than one-quarter of the Fund, in a sector targeted in this budget: Financials4.

• EPI as of February 27, 2015, had 27.1% in Financials compared to 18.6% for the MSCI India Index.

• Because of its earnings-weighted methodology, EPI has a tilt to robust private and public sector banks, with the highest over-weight (relative to MSCI India) being to ICICI Bank with 4.3% in EPI compared to 2.0% in MSCI India.
Investors desiring fundamentally robust companies that have a track record of consistent earnings should continue to be rewarded in what we believe will be an infrastructure and Financials-led growth of the Asian Tiger. In an upcoming blog post, we will highlight the surprise post-budget rate cut and its implications for the broader economy and EPI.

1Sources: Bloomberg, WisdomTree.
2Weight in the WisdomTree India Earnings Fund (EPI), as of 2/27/15: Axis Bank, 0%; Yes Bank, 0%; Federal Bank, 0.27%.
3Weight in EPI, as of 2/27/15: ICICI Bank, 4.33%.
4Holdings subject to change.

Important Risks Related to this Article

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