The WisdomTree India Earnings ETF (NYSE:EPI) and the iShares India 50 ETF (NASDAQ:INDY), two of the largest exchange traded funds dedicated to Indian stocks, are both up more than 26% year-to-date. Even with those gains, enthusiasm remains for stocks in Asia’s third-largest economy.
Those ETFs are among the largest and oldest India ETFs trading in the U.S. and are mostly focused on large-cap Indian equities. 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.
“Investors pumped 189 billion rupees ($2.9 billion) into the funds in September, after pouring a record 203 billion rupees in August, data from the Association of Mutual Funds in India show. The 804 billion rupees of net inflows in the first six months of the year that began April 1 is more than triple compared with the year-earlier period,” reports Bloomberg.
India’s market suffered a blow at the end of 2016 after Prime Minister Narendra Modi yanked about 86% of all cash from the economy to fight so-called black money to fight back against the huge shadow economy. While the economy may experience a short-term setback from the move, the results of demonetization could usher in long-term benefits to the economy.
This year, data points suggest local investors are rushing into Indian stocks. Additionally, the government is pushing various pension plans in the country to increase exposure to equities.
“The flood of cash has provided a buffer against outflows sparked by the risk-off sentiment that’s caused global investors to sour on Asian markets. Funds bought 175 billion rupees of shares in September, despite a bout of market weakness, while their overseas peers remained net sellers as data showed slowing growth in Asia’s third-largest economy,” according to Bloomberg.
Small-cap Indian stocks are performing exceptionally well this year. India small-cap ETFs, including Market Vectors India Small-Cap Index ETF (NYSEArca: SCIF), EGShares India Small Cap ETF (NYSEArca: SCIN) and iShares MSCI India Small-Cap ETF (NYSEArca: SMIN) are among this year’s best-performing non-leveraged ETFs of any type.
More aggressive investors who are confident about India 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.