Hiren Dasani discusses the impact of India's recent election on investors, highlighting the country's long-term growth potential. The podcast also explores India's stability, growth prospects, manufacturing focus, and sector analysis in emerging markets like China and Korea.
Indian markets experienced volatility post-election; stable government reassures investors.
India's long-term growth story remains strong driven by demographics, rising consumption, and stable policies.
Deep dives
Indian Market Volatility Due to Election Results
The Indian markets witnessed significant volatility following the recent elections. Expectations for Prime Minister Modi's party to secure a clear majority were not entirely met, leading to market surprises and fluctuations. Although Modi's party retained a substantial number of seats, coalition support was required for a majority. Initially, market reactions were negative due to the unexpected election outcomes, but confidence grew as stability in government leadership was assured.
Policy Continuity and Long-term Growth Prospects
The discussion highlighted India's consistent policy tone over the last three decades, focusing on economic liberalization and pro-investment measures. Despite changes in government structures, the overall policy direction has been stable, supporting continued growth. The long-term growth story of India remains robust, primarily driven by demographic factors, rising consumption, and growing competitiveness in manufacturing.
Investor Dynamics and Opportunities in India
Foreign ownership of Indian equities is currently at a decade low, with domestic flows fueling market momentum. The financialization of household savings is driving significant retail investments in mutual funds. While foreign investors play a role, domestic flows dominate the market. Opportunities for investment are identified in sectors like consumption, financials, and information technology, with a focus on mid and small-cap segments for potential alpha generation.
Indian markets have endured a wild week, as investors struggle to make sense of an election that has weakened Prime Minister Narendra Modi’s majority. What’s behind the volatility, and are dents forming in India’s long-term growth picture? Hiren Dasani, co-head of Emerging Markets Equity and lead portfolio manager of India Equity Strategies for Goldman Sachs Asset Management, joins Chris Hussey of Goldman Sachs Research to discuss.