Amundi forecasts increase in India's share in global investor portfolios, fueled by strong growth prospects
Foreign investors are increasingly investing in Indian equities due to the government's efforts to expand the country's participation in global supply chains through incentive programs.
PremiumIndia's assets are expected to gain a larger share in investor portfolios due to the country's projected robust economic growth and increasing population over the next decade, according to Amundi Asset Management.
“Investors’ attention should be turning to India," Monica Defend, head of Amundi Institute, wrote in a note dated May 26. Apart from its demographics, “India has all the necessary components to become a key engine for global growth."
As reported by Bloomberg, India will play a significant role in global growth, contributing up to 15% in 2023. The country's economy is expected to outperform both emerging and developed market peers, with an average annual expansion rate of 5.2% over the next ten years.
Foreign investors are increasingly investing in Indian equities due to the government's efforts to expand the country's participation in global supply chains through incentive programs.
As inflation cools, a pickup in consumption and improved earnings will help India’s stocks “overperform" main equity markets, Defend said. Investors are increasingly turning to value stocks, cyclical industries, and mid- and small-capitalization companies, which have fared well in the post-Covid recovery.
Defend predicts that as inflation subsides, India's stocks will outperform major equity markets, benefiting from increased consumption and improved earnings. Investors are showing a growing preference for value stocks, cyclical industries, and mid-and small-cap companies, which have performed well during the post-Covid economic recovery.
“Markets may soon begin to anticipate a turn in policy, although some stickiness in core inflation means that the central bank will not be able to ease quickly," she said.
According to Defend, 2023 is considered a transitional year for India, marked by a moderate slowdown in economic growth. However, the stable macroeconomic conditions will lay the foundation for a sustainable recovery in the economy of the South Asian nation.
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