India – Coming of age – A report by Government of India’s Invest India:
India received $950 billion FDI since 1947, of which $532 billion FDI came in the last 90 months,
India added a unicorn every 9 days in 2022,
From the start of 2015, India’s GDP rank jumped from 10th to 5th,
2/3th of India’s GDP is driven only by domestic demand,
2nd largest working population of 522 million with median age of 29 years,
Services GDP to grow 13X to $20 trillion by 2047,
Manufacturing GDP to grow 15X to $6.2 trillion by 2047,
Per capita income to grow 10X to $20,000 by 2047,
9,000 days from now, India will celebrate the 100th year of independence & India’s per capita GDP will be $20,040 (BCG report). Now multiply that by 1.6 billion Indians. $32 Trillion economy – Deepak Bagla, MD & CEO – Invest India. Watch the full video here:
From the industry leaders:
India can grow at 8%; the time is right to draw investment: World Bank Group President David Malpass
India gives hope for future, proved it can solve major challenges: Bill Gates, founder, Microsoft
India is the richest, untapped investment opportunity: Mark Mobius, father of emerging markets investing & founder Mobius Capital Partners LLP
When investing in equities, always remember:
Indian macro dataflow moderated but remained strong:
Manufacturing PMI: Manufacturing PMI moderated to 55.3 in Feb from 55.4 in Jan but remained in expansion zone (>50 points) for the 20th straight month;
Services PMI: Reached a 12-year high of 59.4 in Feb (from 57.2 in Jan);
GST Collection: Collections of Rs. 1.49 Tn in Feb’23;
Credit growth: Credit growth remained elevated in Feb at 16.1% viz-a-viz 10.2% growth in deposits implying high liquidity crunch;
Inflation: CPI accelerated to 6.52% YoY in Jan after touching twelve month low in Dec. CPI is above RBI’s tolerance level of 6%;
Forex: India’s foreign exchange reserves stood at $562 billion as of March 10;
GDP: grew 4.4% YoY for the quarter ended Dec’22;
Trade Deficit: narrowed in Jan to USD 17.7 Bn as compared to USD 23.8 Bn in Dec.
Key indicators remains robust:
Equities:
Domestic equity markets fell for the third straight month as persisting concerns over higher interest rates weighed on the market;
FPIs sold Rs. 5,294 cr. of Indian equities in the month of Feb;
Mutual Funds SIP inflows remain elevated at Rs. 13,600 cr. for the month of Feb. Net investments in equity through mutual funds surged 25% to Rs. 15,685 cr. as domestic investors remain optimistic about the Indian market;
The Indian equities have witnessed a time correction in the last one year (Increase in corporate profits leading to fall in valuations without any major fall in prices). A few percentage fall may make equities attractive for lumpsum investments.
Fixed income:
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RBI MPC hiked rates by 25bps to 6.5% on February 8, 2023;
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The 10Y G-Sec traded in a band of 7.28%-7.46% and closed at 7.46% in Feb as compared to 7.34% in Jan;
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The current curve remains very flat with everything in corporate bonds beyond 1 year up to 15 years is available @7.5-7.65% range.
Outlook:
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We are likely to face volatile markets for the next 3-6 months as equity markets grapple with central banks focus on calibrating interest rates in the context of slowing demand scenario in 2023;
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However, we remain constructive on equity markets from a 3 years perspective;
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India’s growth story is a long term one and will face some volatility from time to time. We remain convinced that the best is yet to come, and advise investors to stay the course and build their portfolio in a disciplined manner.
Disclaimer: The views expressed herein constitute only the opinions/ facts and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. This information is meant for general reading purposes only and is not meant to serve as a professional guide for the readers.
