Following the government-initiated changes, India seems to be more attractive than other emerging economies, according to Capital Group, an American financial services company.
It said that the stock markets appeared expensive, but there are many positives despite the fact that the Sensex and Nifty had recently traded at record highs.
“. . . we believe the fundamental outlook for India is arguably better than ever. The market has a lot going for it: It’s one of the world’s fastest-growing economies, inflation is under control, the government has been fiscally responsible, and corruption is lower than it was a decade ago.
If Indian companies can deliver on earnings and cash flows, we think it’s possible the market can grow into these valuations.
The path of India’s equities has never been a straight line, but over longer periods, the stock market has delivered some of the best returns among emerging and developed markets,” the company said in a report by three analysts.
Capital Group report said that “while political instability and market volatility may increase in advance of general elections next year, we believe that India is poised for a period of secular growth, fuelled by significant expansion in direct and fixed asset investment.”
The report further said, demographics is the biggest advantage, as bulk of consumption will come from domestic market along with western companies exploring China-plus sourcing strategies.
It said that there was already evidence that India was benefited by China’s exclusion in sectors like chemicals.
With inputs from TOI
