Gaurav Malik, Managing Director of emerging market for State Street Global Advisors says that all are looking for India right now because of reformers. Reformers will be the Performers. Today, value in emerging markets is locked up in resources, energy and materials. But the only way to unlock that is that business should perform and India is doing that. Emerging Global Advisors, a New-York based ETF company agrees that to sell reforms as the important reason for buying Indian equities.
Reforms mean tax changes and rules changes that allows for greater absorption of foreign money into Indian companies. 2015-16 fiscal budget pleased investors despite a marginal sell-off of 0.5% in the stock market. Indian equities are not overbought yet. The relative strength indicator is still in the 50s. An RSI of 70 is a sell signal for technical traders. There are numerous reasons why investors should consider India. Here are the five key reasons to invest in India.
Reforms across selecting emerging market countries are expected to refresh economic growth. These include foreign direct investment, the Land Acquisition Bill, the coal and power sector, direct transfer subsidies, streamlined tax regimes, Deregulation of Diesel Prices. India is expected to have the fastest GDP growth rate in emerging markets and to surpass china’s in 2016.
Peter Kohli, CEO of DMS Funds, says that India will have a bull market for the next five years. Investors like the monetary policy discipline of Raghuram Rajan. India is focused on managing inflation, which helps the central bank to lower interest rates; a strengthening rupee prevents the erosion of return for U.S. investors. The lower price of oil and better fiscal management, including cutting government subsidies are helping to reduce the fiscal deficit. Consensus estimates for corporate earnings in emerging markets are improving over the next two years, and estimates for India are better still.
In 2016, India’s earnings growth is expected to increase to almost 20%, up from a projected 7% in 2015. India earnings are forecasted to surpass not only the MSCI ACWI Index, but also the rest of emerging markets and the MSCI EAFE Index. It’s not too late to buy India. India’s current forward valuation levels point to sustainable growth at a reasonable price over the long term, relative to other global equity benchmarks and in relation to its own growth rate. India’s valuation is only slightly above its 10-year average and similar to that of the S&P 500 Index.
