Topic: Should the Indian stock market a new high of history be alert?
The Indian stock market that has created a new high and has risen for eight years, can I still buy it in 2024?
Source: Wall Street See Wen Bu Shuqing
India is moving towards the third largest economy in the world. The strong fundamentals will form a strong support for the stock market. Foreign capital may have more room for inflowing. From the valuation point of view, the Indian stock market price -earnings ratio is close to U.S. stocks, which is much higher than MSCI’s emerging emerging emerging emerging.Market and European stock market.
The crazy trend of the Indian stock market this year has been attracted again. Driven by financial stocks and energy stocks, the total market value is close to 40 million US dollars, second only to the United States, India and Japan.
Star stocks have advanced together. The main stock index Nifty 50 Index has risen nearly 13%this year, and it is moving towards an unprecedented eight -year consecutive rising.
And unlike the liquidity of 2020 and 2021 and the fanaticism caused by technology, this year’s rebound has a more solid foundation:
Economic growth is strong, corporate profit margins have risen, and valuations look more stable.For example, according to FACTSET data, the transaction price of Ishares India MSCI ETF is 21 times the expected income in the next 12 months, a slightly higher than 19 times and the average price -earnings ratio of the ETF before the new crown epidemic, which is also about 19 times.
Moreover, India attaches great importance to investors. For example, when a corporate delisting, it must repurchase the shares in the hands of investors to ensure that the shareholders’ rights and interests are not infringed.Those are more friendly.
It is ending in 2023, and in 2024, is it worth buying in the crazy Indian stock?
The population is more than 1.4 billion, India is moving towards the third largest economy in the world
From a fundamental point of view, India has many advantages to support the rise of the stock market. For example, the economic growth is extremely rapid, the inflation is decreasing, the political environment is relatively predictable, and the technology industry is booming.
Thanks to the growth of manufacturing and government expenditure, India’s GDP increased by 7.6%year -on -year in the third quarter and is the fastest growing major economy.According to the International Monetary Fund (IMF) forecast, by 2027, India will surpass Japan and Germany to become the third largest economy in the world.
According to the brokerage company Lyon Securities, the cheap approximately accounts for 45%of the total oil imports of India, which provides support for the central bank to suppress inflation.
Investment service company Hargreaves Lansdown’s investment analyst Henry Ince said:
The strong momentum of India’s economy has become the focus of attention to investors investing in Asia and emerging markets.
India is also one of the countries with the most population and the youngest population in the world, and is rapidly absorbing the manufacturing investment of multinational companies.
"(Economic) growth has benefited from a good population structure. Nearly 70%of India’s 1.4 billion population is at the working age." The Internet pointed out that "consumption, especially the middle class consumption, will become an important theme of investors.In 2050, India is expected to contribute about 40%of the world’s middle -class consumption, which is significantly increased from the current 5%. "
Dina Ting, the head of Franklin Dunpon Global Index Investment Group, said:Indore Stock
People are recognizing that (India) is a market that they cannot ignore.
She believes that India has benefited both its own reform agenda and the development trend of the global economy.
Ting pointed out that the Indian government has carried out a series of reforms to promote growth, such as the launch of goods and service tax nationwide, replacing various local taxes; and infrastructure construction, such as planning to build 80 airports in the next five years.
"Reform and infrastructure construction is the key," said, "In many cases, India is very backward in infrastructure," but the government’s current focus is "promoting the development of the transportation industry through huge investment in airports and aircraft."
Ting believes that the advantages of population and information technology will help India attract more investors, so that it will occupy a higher weight in the MSCI emerging market index. At present, this number is 15.3%.
The foreign investment of "heroes" in India may have more room for inflowing
As the fifth largest stock market in the world, the Indian stock market may still have more room for foreign investment.
Data from Lyon Securities show that the proportion of non -resident investors currently holds Indian stocks 17.5%, which is still far below the peak of 20.6%in February 2021.
Kotak Mahindra Asset Management Company pointed out that so far this year, the Indian stock market has inflow of US $ 12 billion in foreign capital, and last year’s net outflow of US $ 17 billion.
Foreign capital inflows sharply, and the Indian People’s Party led by Modi has achieved success in the state election, promoting the Nifty50 and Sensex stock indexes a new high in recent days.
The price -earnings ratio is close to U.S. stocks, and how room for rising in the Indian stock market?
Since the beginning of 2020, the Sensex index has risen by more than 60%, while the MSCI emerging market index has fallen by 12%.Surat Stock
The average price -earnings ratio of the Sensex index last year was 21.4 times, similar to the US stock market’s earnings ratioSimla Wealth Management. In contrast, the MSCI emerging market index and Stock Europe 600 index P / E ratio were 11.9 times and 12.5 times, respectively.
Therefore, INCE believes that the Indian stock market is now high.He warned:
Considering the performance of India compared to other Asian and emerging market countries, it is not time to match India in the investment portfolio.
Anuj Arra, the chief investment officer of the Asset Management Company and the Chief Investment Officer of the Asia -Pacific team, also warned that in the past 30 years, the Indian stock market has experienced similar valuations four times, "each time has led to a period of stagnation for 5 years."
Dzmitry Lipski, head of research director of the retail investment platform, believes that the current valuation of the Indian stock market is higher than other emerging markets and "and" in a high position in history ", but he believes that it should not be a factor that damaged the transaction -unless unless it is unless it is unless the transaction -unless it is unlessSome people are purely for short -term investment.
It is also worth noting that the revenue of foreign investors in the Indian stock market will be diluted. Foreign investors holding Indian stocks less than one year need to pay 15%of capital gain tax, and the longer position holding a long time must pay 10%Of capital gains tax.
Moreover, India has restrictions on foreign ownership of many stocks and restricts the proportion of shares that foreign investors can hold.This brings difficulties to passive funds because they need to build a reasonable and decentralized index to track it, but foreign capital restrictions make them unable to fully copy the index; it is also a limit on active funds, because they cannot fully fulfill the stocks that only the most interesting stocks.invest.
Other risk factors: oil prices, inflation, public liabilities …Guoabong Stock
Of course, some uncertain factors will affect the trend of the Indian stock market next year.
Almost all oil in India depends on imports. The rebound of oil prices may force the Indian central bank to return to a tough position. If the Fed started to cut interest rates next year, the Indian central bank will not follow the interest rate cut.
In October, India’s inflation rate hit a five -month low of 4.87%year -on -year, but it was still higher than the 4%goal of the central bank, indicating that the Indian central bank must take a more cautious position in terms of monetary policy.
Although India also has a large number of foreign exchange reserves, frequent project deficits continue to exist.
In the third quarter, India’s regular project deficit has expanded from $ 1.3 billion in the first quarter (0.2%of GDP) to $ 9.2 billion, accounting for 1.1%of GDP.
Public liabilities also put pressure on India’s economy.
The consulting company GaveKal said that Indian government debt burden has accounted for more than 80%of GDP and is one of the countries with the highest government debt in emerging markets.
The continuous rise in government bonds means that the high growth rate of public investment may be difficult to maintain.If India wants a real infrastructure country, government bonds will be a major hidden danger.
Risk prompts and exemption clauses
The market is risky, and investment needs to be cautious.This article does not constitute personal investment suggestions, nor does it take into account the special investment goals, financial conditions or needs of individual users.Users should consider whether any opinions, opinions or conclusions in this article meet their specific conditions.Based on this investment, the responsibility is on the responsibility.
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