ETF Trends
ETF Trends

Emerging markets equities are soaring in 2017 and one of the best-performing markets within that group is India. For example, the iShares MSCI India ETF (BATS: INDA), PowerShares India Portfolio (NYSEArca: PIN) and the WisdomTree India Earnings ETF (NYSE: EPI) have all notched double-digit year-to-date gains.

Enticing money managers, India’s economy is expected to expand faster than its BRIC – Brazil, Russia, India and China – counterparts. India’s trade imbalances are also diminishing and the country’s currency and stocks have held up. The gains have not been confined to Indian large-caps.

The India ETFs that focus on small capitalization stocks have been among the best performers in the emerging markets category year-to-date, with the Columbia India Small Cap ETF (NYSEArca: SCIN), VanEck Vectors India Small-Cap Index ETF (NYSEArca: SCIF) and the iShares MSCI India Small-Cap ETF (BATS: SMIN) each among this year’s best-performing single-country emerging markets ETFs. New Delhi projects India’s economy could expand between 6.75% and 7.5% in 2017-18 as the government shifts tactics on its economy.

“Approximately 10 million Indians are joining the workforce every year.  Its non-performing loan cycle has likely peaked. It is a beneficiary of low oil and commodity prices. Its people are free to compete economically and express themselves politically. When you add a strong-willed reformer to the mix, the case for India’s economic future is compelling,” according to a PNC Capital Advisors note posted by Dimitra DeFotis of Barron’s.

Prime Minister Modi has also hinted at encouraging SMEs, or small and medium enterprises, with tax relaxation and new incentives offered toward small business owners. The government has brought a renewed focus on SMEs to capture a larger market space.

The economy as a whole is also on a more stable ground and is stronger than most of its developing market peers. India is enjoying one of the world’s fastest growth rates, improved fiscal discipline, a stable rupee currency, moderate current account deficit and slowing inflationary pressures.

“The country has generally moved from a more socialized orientation to a greater reliance on the private sector and is more open to the capital markets and trade. While skepticism is warranted based on years of false starts and structural headwinds, India is finally in the position to determine its own future,” according to the PNC note seen in Barron’s.

More aggressive investors who are confident about a bounce back may even look to a leveraged bullish play on Indian markets. The Direxion Daily India Bull 3X Shares (NYSEArca: INDL), which takes the 3x or 300% daily performance of Indian stocks.

For more information on Indian markets, visit our India category.

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.