- Indian stock market has been strong as economic prospects brighten
- Favourable demographics and an improving regulatory environment are supporting investment
- Politics are not straightforward and market is expensive relative to history
If the World Bank’s forecasts are correct, India will regain its status from China as the world’s fastest growing major economy next year, following years of disappointing growth and a pandemic that exposed India’s inadequate infrastructure, with tragic consequences. Investors are certainly bullish on India: its stock market has been the strongest of any major country's recently, with MSCI India index up 30 per cent over the year to 8 October. That compares with rises of 16 per cent for MSCI USA and 10 per cent for MSCI UK, and a 17 per cent fall for MSCI China over that period.
So the question now is, are Indian equities stocks too expensive or do that country’s favourable demographics, huge population and improving regulatory environment make them one of the most promising structural growth stories available?