Is it the right time to invest in Indian equity?

Over the last two decades, India’s stock market has exceeded the performance of both its peers in emerging markets and the S&P 500 Index. This trend is primarily driven by India’s consistent economic expansion, argues Charles Schwab in a recent market assessment. Last year, India outpaced China in population, reaching 1.4 billion people, with over half being younger than 30 years old. Moreover, S&P Global forecasts that by 2030, India is set to surpass both Japan and Germany, becoming the world’s third-largest economy.

However, the asset manager cautions that India’s growth story is “still very much in flux -and not without risks.”

As forces working in India’s favour, Charles Schwab names the supply-chain relocation following the Covid-19 pandemic, government stimulus and rising domestic demand. On the downside stand workforce imbalance, restrained workforce participation as well as expensive stocks.

Jeffrey Kleintop, Chief Global Investment Strategist at Charles Schwab, suggests: “As things stand, investors interested in India may want to consider gaining exposure through a broad-based emerging-markets index fund rather than a country-specific fund. However, if India can deliver on its demographic dividend and continue to make investment there more attractive, its growing contributions may provide an opportunity for investors.”