India ETFs and Modi's Third Term: Examining Potential Economic Growth

Last week brought a rollercoaster of emotions for Indian stocks, initially shaken by the possibility of Prime Minister Modi's BJP falling short of a majority. However, sentiments quickly shifted as it became evident that the party's coalition would indeed form the government, leading to a significant market rebound.

With Modi's inauguration into his third term, investor focus is on the implications for the Indian economy and stock market. Despite potential hurdles in implementing his agenda, the fact remains that investors are reassured by the continuity of a business-friendly administration.

Key cabinet positions, such as finance and defense, have seen no change, signalling stability. This steadiness is deemed essential as India navigates through China's economic slump, which has indirectly benefited India. Global firms are increasingly diversifying their investments, moving away from China due to geopolitical frictions and India—with its vast skilled workforce—stands as a promising alternative.

Global giants like Apple and Nvidia are amongst the high-profile companies that are ramping up their operations in India, looking to capitalize on the government's push for foreign investment.

India's impressive GDP growth of 8.2% in the past fiscal year and predictions from institutions like Goldman Sachs, which forecast it becoming the world's second-largest economy by 2075, underline the region's economic vitality. This growth is predominantly fueled by the domestic market and robust investment.

The country's massive population, now surpassing China's and comparatively younger, alongside a burgeoning middle class with rising incomes, sets the stage for sustained long-term growth.

India has also seen a transformative digital revolution, propelled by affordable internet and smartphones, advancing technologies, and a government committed to digital infrastructure.

Exchange-Traded Funds (ETFs) such as the iShares MSCI India ETF, WisdomTree India Earnings Fund, and iShares MSCI India Small-Cap ETF are attracting more investor interest against the backdrop of these economic dynamics.

India, ETFs, Economy