① In 2023, the Indian stock market not only achieved an unprecedented eight years of continuous growth, but its market capitalization also broke through the $4 trillion mark; ② Komo believes that after this year's Indian election, the local stock market is expected to attract more foreign capital inflows; ③ Goldman Sachs has put forward similar views before.
Financial Services Association, March 20 (Editor: Huang Junzhi) In 2023, in addition to US stocks, the Indian stock market also “boomed all the way” and performed brilliantly. Not only has it achieved an unprecedented eight-year rise, but its market capitalization has also broken through the $4 trillion mark. However, this has also raised investors' concerns: will 2024 still be this “crazy”? However, looking at it so far, Wall Street seems to have a positive attitude.
Rajiv Batra, an Asian strategist at J.P. Morgan Chase, believes that after this year's general election, the Indian stock market is expected to attract more foreign capital inflows, and the promising growth prospects of the Indian economy and the Federal Reserve's interest rate cuts will act as a catalyst.
He said that global funds still have very few positions in the Indian stock market, and investors will use any pullback as an opportunity to increase their holdings. As he expressed this opinion, overseas capital flows became more unstable before India's national election due to concerns about overvaluation (the Nifty 50 index is about 50% higher than the rest of the Pacific region).
Batra said, “Foreign investors have not increased their relative positions in India over the past 2-2.5 years. As the dust settles in the general election, they will begin to refocus on growth-driven policies or reforms.”
India will hold a general election for 6 weeks starting April 19. The counting of votes will be carried out on June 4, and the results of the vote count will be announced on the same day.
Foreign capital flows in “very quickly”
Komo anticipates that since Indian Prime Minister Narendra Modi is widely believed to be re-elected, there will be more capital inflows this year. Outsiders believe that Modi's third term is expected to continue to implement market-friendly policies, increase infrastructure spending, and promote foreign direct investment.
The bank also pointed out that with supply chain adjustments, more and more companies are entering the Indian market, and India is currently one of its most promising global markets. Batra said investors are increasingly interested in India and are forming a “virtuous cycle” of increased liquidity, seller coverage, investor participation, and capital issuance financing.
“We estimate that if investors covering emerging markets, Asian markets other than Japan, and global markets other than the US simply take back their previous reduced positions in India, it will lead to an inflow of 100 billion US dollars in capital over the next few years.” he added.
It's a coincidence. Goldman Sachs analyst Sunil Koul also predicts that Modi will win a third term and that “policy continuity” will attract more foreign capital inflows after the election is settled.
“Global funds are keen to increase their exposure in India and are looking for better entry points. We expect foreign capital flows to pick up in the second half of this year as the general election comes to an end, and as central banks relax monetary policies and the dollar weakens, the overall liquidity environment will support capital flows in emerging markets.” he said.