Investors are really interested in India! Money flowing into funds that track Indian stocks hit an all-time high in 2023. It’s something of a record year for these funds, called exchange-traded funds (ETFs). People feel positive about India even as important elections approach.
Last year, these India-focused ETFs raised $8.6 billion in new money, surpassing the previous record in 2021. Experts believe this trend will continue as the general election approaches, and predict that Prime Minister Narendra Modi will be elected for a third term.
Why is everyone so excited? Well, although there is a big choice, investors seem to think that it is not a risky move. In other places like Taiwan, elections led investors to withdraw money, but in India it is different.
India’s stock market is doing very well and after the Modi-led Bharatiya Janata Party (BJP) gained control of key states, foreign investors made the largest monthly purchases of stocks in December. People are hopeful about the country’s economic progress, making it an attractive place for investors.
India expects to grow 7.3% this year, the fastest among major global economies. Investors see India as a good option to balance their investments, especially with concerns over China’s economic growth and tensions between China and the US.
Although the Indian stock market is up 20% in 2023, more than other markets, experts warn that it is essential to choose companies that can perform better than expected. They say high stock prices in India could be a challenge for investors.
US-listed ETFs focused on India took in more than half of the money invested globally in India-focused funds in 2023. The WisdomTree India Earnings ETF and the iShares MSCI India ETF were the top picks.
Investing in India through ETFs is easier for foreign investors than buying shares directly in India, which can be time-consuming. Experts believe the 2024 elections will be good for Indian stocks as it will bring in more money and show that the country will stick to its economic plans for years to come.
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