More investment growth in India could continue to boost the Direxion Daily MSCI India Bull 3x ETF (NYSEArca: INDL), which rose 9.21 percent on Tuesday and another 2.71 percent during Wednesday’s trading session.
India’s Central Statistics Office recently lowered its gross domestic product (GDP) estimate to 7 percent from 7.2 for 2019, which represents the lowest GDP growth within the last five years. A lack of growth in agriculture and government consumption have been dragging on the GDP estimate, but according to Money Control contributor Rajani Sinha, one positive sign is more investment growth.
“Investment GDP is estimated to have improved to 10 percent in FY19 from 9.3 percent in previous fiscal (CSO advance estimate),” Sinha noted in an article. “Other investment indicators like the index of industrial production (IIP) capitals goods growth has also improved to 7.3 percent in the fiscal year so far, against 4.2 percent in FY18.”
INDL’s recent upticks have it moving towards its 200-day moving average:
Mimicking China’s Stimulus Measures
More foreign investment to stimulate the economy is the path that China has been taking as of late, which could also prove beneficial to India if it decides to mimic its strategy. China is becoming less resistant to safeguarding its businesses in order to open up pathways to more foreign investment.
Forbes reported this week that Chinese officials are meeting to discuss which sectors to give access to foreign investors–something India might also want to consider as an avenue for more growth.
“It will be very critical that the investment growth momentum continues and the government will have to take the lead,” wrote Sinha.
Related: Get TAWK-ing With These New Leveraged ETFs
Ideally, investment growth could feed into more private consumption growth. Since private consumption accounts for 58 percent of India’s GDP, this is a key indicator.
In an effort to stimulate the economy by improving consumption, the Indian government announced a tax cut for the sale of residential properties. India’s housing market took a hit last year due to the languishing economy and underperforming loans in the banking sector.
“Going forward, if the investment uptick gathers pace, it will result in private consumption growth gaining momentum,” Sinha added.
For more market trends, visit ETF Trends.