The Indian stock market is outshining the red-hot Nasdaq, with strong profit growth, geopolitical tailwinds, and favorable demographics making it a compelling investment case. The MSCI India Index has surged 110% since the end of 2019, outperforming the U.S. tech-heavy index and even surpassing the world’s largest emerging stock market, MSCI China, which is down by 30% over the same period.
The contrasting fortunes of the two markets reflect their economic realities, with China’s housing market woes and regulatory crackdown on tech companies weighing it down, while India’s fast-growing economy and young population make it an attractive investment destination. The higher multiples driving India’s rally, along with its increasing weight in global benchmarks, are drawing the attention of foreign investors.
Despite some setbacks, such as the recent Indian election outcome affecting market sentiment, India is increasingly becoming a market that global investors cannot ignore. With a reformist government in power and a growing economy, India’s valuation gap with China may not keep widening, but it certainly seems justified.
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