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The Case for Investing in India: The Best Structural Story in Emerging Markets
India's Strong Fundamentals and Stellar Returns
India has emerged as the top choice among emerging markets, according to Goldman Sachs strategist Sunil Koul. Despite Indian stocks already reaching record highs, Koul believes that the country's strong fundamentals and stable macros make it a worthwhile investment. He points to the 15%+ earnings growth in the first quarter and suggests that investors should buy every possible weakness to take advantage of reasonable valuations. Over the last 20 years, Indian stocks have generated a compound annual return of 16% in local currency terms and 13% in dollar terms, making it a fertile ground for picking stocks.
Key Sectors for Investment
Koul recommends the banking sector due to its mid-cycle valuations and market share gains from non-banks. HDFC Bank, ICICI Bank, State Bank of India, and Kotak Mahindra Bank meet Goldman Sach's criteria for an attractive growth and valuation profile. For investors looking for exposure to Indian stocks, an India-focused ETF such as VanEck India Growth Leaders ETF or Nifty India Financials ETF could be considered. In addition, Koul suggests looking into infrastructure and cement sectors, with UltraTech Cement and Larsen & Toubro being highlighted as potential investment options.
Accessing Indian Stocks for Global Investors
Investors can access HDFC Bank and ICICI Bank through U.S. trading. For exposure to State Bank of India, the VanEck India Growth Leaders ETF could be considered, while Kotak Mahindra Bank is available via the Nifty India Financials ETF. UltraTech Cement is accessible through the ProShares MSCI Emerging Markets Dividend Growers ETF, and Larsen & Toubro is included in the iShares India 50 ETF.
Seizing Opportunities in India's Promising Investment Landscape
India's robust fundamentals and impressive returns position it as a compelling investment destination, as highlighted by Goldman Sachs strategist Sunil Koul. Despite record highs in Indian stocks, Koul emphasizes the country's stable macros and strong earnings growth, making it an attractive option for investors. This analysis presents a significant opportunity for new businesses looking to explore and capitalize on India's thriving market.
Koul's recommended sectors, such as banking, infrastructure, and cement, offer avenues for entrepreneurs to potentially leverage India's growth story. With mid-cycle valuations and market share gains from non-banks, banking stocks like HDFC Bank, ICICI Bank, State Bank of India, and Kotak Mahindra Bank emerge as potential investments. Additionally, the infrastructure sector, including companies such as Larsen & Toubro, and cement stocks like UltraTech Cement, hold promise for new businesses seeking opportunities in India's expanding economy.
For global investors, accessing the Indian market has become increasingly feasible. U.S. trading facilitates investments in banks like HDFC Bank and ICICI Bank. Exchange-traded funds (ETFs) specifically focused on India, such as the VanEck India Growth Leaders ETF and Nifty India Financials ETF, provide exposure to the Indian stock market. Moreover, ETFs like the ProShares MSCI Emerging Markets Dividend Growers ETF and iShares India 50 ETF offer access to specific Indian companies, including UltraTech Cement and Larsen & Toubro, respectively.
In conclusion, India's compelling investment landscape, driven by strong fundamentals and impressive returns, presents an alluring prospect for new businesses. By carefully considering the recommended sectors and accessing the Indian market through various investment instruments, entrepreneurs can position themselves to capitalize on the country's growth potential. Embracing the opportunities in India will undoubtedly be a strategic move beneficial for the establishment and growth of new businesses.
Article First Published at: https://www.cnbc.com/2023/07/03/goldman-sachs-shares-top-stocks-to-buy-in-india-as-investor-interest-off-the-charts.html