Consider India If You're Looking at Emerging Markets

Emerging markets (EM) can offer traders a comeback story play, but one country in particular could be suitable for opportunities in both the short term and the long term: India.

Global investment firm Morgan Stanley “has upgraded its view on Indian markets to ‘overweight’ from ‘equal weight’, citing easing valuations as compared to October 2022, when the global brokerage identified the onset of a new bull market in Asian and emerging market equities,” a Reuters report said. The time could be right for traders to shift back into EM assets, as fewer rate hikes by the U.S. Federal Reserve and a weaker dollar could translate into strength for developing nations moving forward.

India, in particular, presents a compelling case given Goldman Sachs’ research. The firm cites India as the “top ranked, most-preferred” EM country (jumping six spots to secure the top position) thanks to its “supportive foreign inflows, macro stability and positive earnings outlook.”

This opens possibilities in the Direxion Daily MSCI India Bull 2x ETF (INDL), which seeks daily investment results equal to 200% of the performance of the MSCI India Index. That particular index measures the performance of the large- and mid-capitalization segments of the Indian equity market, covering approximately 85% of companies in the Indian equity universe.

Second-Largest Economy?

In addition to short-term trading opportunities, India can provide for a long-term growth prospect. Global investment firm Goldman Sachs can foresee a scenario where India could become the second-largest economy in about 50 years, supplanting China’s current standing as runner-up (which, according to Goldman Sachs, will be the largest).

“A host of factors like a rising population, progress in innovation and technology, higher capital investments and rising labour productivity could potentially make India the world’s second largest economy by 2075, according to Goldman Sachs Research,” a Greek City Times report noted, saying that the country’s GDP “at current prices could be pegged at $52.5 trillion in 2075, it (Goldman Sachs Research) said, while forecasting the China’s economy, then to be the world’s largest, to have a size of $57 trillion.”

One of the factors affecting its growth trajectory is the country’s capability of relying on and making use of its own human capital.

“Over the next two decades, the dependency ratio of India will be one of the lowest among regional economies,” said Goldman Sachs Research’s India economist, Santanu Sengupta, per a CNBC article.

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