India stocks and related ETFs are already in the midst of a multiyear stretch of being emerging markets leaders. Some market observers believe that candle will continue to burn bright for years to come.
Should that prognostication prove accurate, ETFs such as the WisdomTree India Earnings Fund (EPI) and the WisdomTree India Hedged Equity Fund (INDH) could deliver for investors. EPI is one of the oldest and largest funds in the India ETF category. INDH is a new rupee-hedged alternative that came to market in May.
India stocks have continued trending higher despite some disappointment in national elections in the country. While Prime Minister Narendra Modi easily won a third term, his BJP party surprisingly shed some seats. That means Modi will need to form a coalition government. Still, EPI jumped 6.17% for the month ending June 14 and hit a new 52-week high last Friday.
EPI, INDH Could Be Long-Term Winners
Looking at its recent multiyear performance, EPI is already one of the best-performing single-country ETFs of any variety dating back to 2020. INDH could claim that lofty status, too, if experts’ views on India stocks are validated.
“We’ve been bullish on India since April 2020. We still believe that India is likely to drive a fifth of global growth in the coming decade,” noted Ridham Desai, Morgan Stanley’s head of India research and chief India equity strategist. “This will be underpinned by increased offshoring of both services and manufacturing, as well as the energy transition and the country’s advanced digital infrastructure. India’s stock market has been making new highs. The big investor debate now is what could take the India market even higher from here.”
Desai highlighted several areas of emphasis for Modi in his third term that could benefit India’s financial markets. Those include consolidation of fiscal deficits, infrastructure expenditures, and broadening of the country’s manufacturing. Alone, each could be beneficial to EPI and INDH. All three goals being realized could pave the way for more upside by the stocks held by those ETFs.
“Of course, there are plenty of risks, even with the elections behind us – from various capacity constraints to geopolitics, the impact of AI and climate change. But even with all these in mind, we still believe this is set to be India’s longest and strongest bull market ever. Stay invested,” concluded the Morgan Stanley strategist.
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