As its economy continues to grow apace, India is expected to retain its place as one of the bright spots in the global economy in 2024.

With having garnered significant attention due to India’s remarkable economic growth and potential, our in-house expert takes on some of the biggest questions looming on the minds of investors.

1. What makes India an attractive investment opportunity?

India is an attractive opportunity for several reasons. As a domestic-oriented economy, it’s relatively insulated from global macro headwinds. After a period of sub-par growth in the years before COVID, India is now one of the world’s fastest-growing major economies.

Underpinning this growth is real estate. There’s been a long-overdue recovery in residential property sales. At the same time, the government has been funding infrastructure development to create more jobs and spur private capital expenditure. Inflation is under control, barring the occasional spikes in food prices. Consumer sentiment is gradually recovering, albeit with more room to improve. Meanwhile, employment and wages are returning to pre-pandemic levels. India also enjoys relative geopolitical stability compared to China, with strong bilateral and multilateral ties to the US, Europe, ASEAN, and the Middle East.

Over the long term, India benefits from demographic dividends due to its sizable population, which is experiencing a gradual increase in disposable income. The country is also repositioning itself as a global manufacturing hub. Many multinational corporations are diversifying their supply chains by relocating certain functions to India, attracted by the country’s skilled, cost-effective labor pool. For example, many of Apple’s high-end iPhones are now assembled in India. On the corporate side, India is home to a growing number of exceptionally well-run companies with good fundamentals, strong competitive positioning, and excellent management teams.

2. What were the drivers for India's recent stock market rally? Is more upside in the rally expected later this year or are we near its peak?

India was one of the best-performing equity markets in 2023, delivering strong returns compared to other emerging markets. Robust economic growth and a strong macro environment drove market sentiment. This helped sustain attractive earnings growth and a recovery in return on equity. Small- and mid-cap names outperformed large caps, with the overall market up more than 24% by our numbers. Predictably, investor attention towards Indian equities increased in 2023.

According to Business Standard, foreign institutional investor inflows tallied over US$21 billion – the highest emerging Asia country for the year. Domestic institutional investors have also been stepping up, pouring in around US$70 billion between 2021 and 2023.

There’s potentially room for more upside in this rally, but some risks persist. Election surprises could materialize, while the market is relatively expensive compared to other emerging markets. India has historically traded at a premium compared to other emerging markets. However, valuations are currently elevated, even on a relative basis, particularly in small- and mid-cap names. It seems investors are willing to pay a premium for India’s growth potential. Nonetheless, it requires good judgment to gauge how much to pay for that growth.

3. India is holding a general election shortly. What role will this play in investment strategies for 2024 and beyond?

Political stability and economic reforms have been the cornerstones of India’s recent growth. Prime Minister Narendra Modi’s government, which is seeking a third term, introduced sweeping measures across the board to attract multinational companies. These included everything from simplifying India’s tax structure to introducing production-linked incentive schemes.

In the upcoming election, we’re looking for signs of political continuity that, in turn, will lead to policy continuity. This should provide a supportive backdrop for sustained economic growth. As it stands, the market broadly expects Modi to win another mandate that would enable the government to continue with its reform agenda. However, the number of seats his Bharatiya Janata Party secures will be important. Fewer seats would mean it will likely need to offer greater concessions to smaller parties to form the next government. This arrangement may introduce uncertainties regarding Modi's priorities, which we anticipate will again focus on reforms and transforming India into a global manufacturing hub.

4. What are themes expected to do well over the next 2–3 years and why?

We find the most compelling opportunities in the following investment themes.


Rising affluence in India is rapidly driving premium consumer spending in areas like financial services, autos, food, and personal care. We hold several high-conviction, quality names spanning these sub-categories, including fast-moving consumer goods giant Hindustan Unilever.

Building India

Urbanization and the current boom in infrastructure development are benefiting property developers, material producers such as cement, as well as industrial names. We have recently repositioned the portfolio to take better advantage of the public capex-driven infrastructure trend.

Exporting talent

India’s giant IT services sector helps global companies become digital- and cloud-ready. True, the near-term outlook is somewhat uncertain, owing to the potential impact of a world recession on corporate tech spending. However, the companies we hold are high-quality businesses that are intrinsic to India’s emergence as a global IT services hub.

Financial inclusion

Digitalization is enabling the delivery of financial services to India’s underserved mass market. The accumulation of wealth is creating demand for more financial products. Our exposure is spread across well-capitalized private sector banks and non-bank financial companies. We also like good-quality insurers with unrivaled network access.

Going green

Policymakers are committing to a greener and lower-carbon future. Plays on renewable energy and related infrastructure, and environmental management all have a bright future. India plans to produce half its total power from non-fossil fuel sources by 2030.

5. While an attractive market, what are India's shortcomings for improvement?

Investing in India is not without risk, but most of this is external. Factors include potentially higher energy prices given India’s status as a net oil importer, a global economic slowdown affecting exports, and rising volatility before the elections (around 50% of the planet’s population go to the polls in 2023). Geopolitical tensions with neighboring China and Pakistan could also affect growth trajectory and political stability. Valuations remain a perennial concern. Against this backdrop, we believe bottom-up stock-picking based on fundamental research remains the best way to invest in India.

Important information

Projections are offered as opinion and are not reflective of potential performance. Projections are not guaranteed, and actual events or results may differ materially.

Foreign securities are more volatile, harder to price, and less liquid than U.S. securities. They are subject to different accounting and regulatory standards, and political and economic risks. These risks are enhanced in emerging markets countries.