The Indian future: Nifty!

It's no wonder they call India's benchmark stock index “Nifty.” Lately, he has made progress that is just that: elegant, clean, passionate. The index, which follows the country's top 50 companies, has jumped more than 20% since March, beating the S&P 500 and other large markets. And this time, the rally is fueled by more than just advertising and tech trends.

Here are three good reasons why this upward trend could continue in 2024:

Growth

First, India is still growing, rapidly. Despite the slowdown in the global economy and a number of nationwide interest rate increases, India's economic output rose by 7.6% in the three months leading up to September. This aspect helped it maintain the title of the world's fastest growing large economy, with higher growth expectations of 6.3% for next year.

India GDP Growth: Annual percent change

Work

Secondly, China's repercussions on the Western world are playing in India's favour. Many multinationals are investing money in Indian manufacturing, trying to diversify their supply chains away from China. With a population that has recently surpassed the Chinese one, there is a very large workforce able to meet the growing demand.

Number of people using the internet: India vs United States

Infrastructure

And thirdly, India spends generously on infrastructure. Therefore, its industrial stocks thrive, as the country prepares for next year's election and seeks to firmly establish itself as a hot spot for global companies. The country has set itself the ambitious goal of moving from a developing economy to a developed economy by 2047, and has allocated the exorbitant $120 billion in the latest capital expenditure budget: more than double what it spent three years ago.

If there is an obstacle in front of Indian stocks it is that they are expensive. They have high ratings compared to other emerging markets. And for Indian stocks it's been like this for a long time: Currently, when you consider future earnings, the Nifty is 64% more expensive than MSCI's emerging market index.

To add potential Nifty exposure to your portfolio, the following ETs can be consideredF:

• iShares MSCI India ETF (INDA)

• WisdomTree India Earnings Fund (EPI)

• Franklin FTSE India ETF (FLIN)

Real GDP Growth (October 2023)

9 December 2023

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