We believe this has never happened in the 20^th century that a market was both, a democracy and the most populous nation in the world. We wouldn’t call India the most populous nation in the world, let’s tweak this a little and call it the biggest democratic consuming nation in the world!

At the 13^th Investment Conference conducted by the CFA Institute, many eminent economists like Russel Napier, fund managers like Sunil Singhania, Rajeev Thakkar and regulators like Anant Narayan shared their views on various topics like global Equity markets, global economies, emerging markets, regulations, etc. but the consensus thought was this is the decade for Indian equities as an asset class and this is not in any way to sell stories about “this time, it is different”, but in true sense, it is. There are too many tailwinds this time for India which we guess wasn’t the case in the past, there is strength seen in India on all sides, economically, politically, globally, demographically and environmentally. Let’s touch up on each of the points by dividing them into two sections, domestically and globally.

Domestically:

India is a nation with a per capita of 2,200$ with an economy growing at 6-8% and with the lowest Debt to GDP ratio in the investable economies’ universe. On the demographic front, we are the youngest nation with an average age of 28, the biggest democracy and the most diversity. Politically, we have a stable government and sentiments suggest that the current ruling party is going to be re-elected for another term.

We have made structural reforms by way of demonetisation, GST, insolvency & bankruptcy, digitisation, etc. unlike the previous times when only incremental reforms were made. In terms of national security, we have never felt this strong and we are more respected from a global standpoint, and these are not perceptions, we have witnessed it, we are the president of G20.

Now, coming to equity markets, the story is the same! Indian markets have in dollarized terms given a 10-year CAGR of 8.3% vs China & Emerging markets which were negative. Indian DEMAT accounts grew from 4cr two years back, to 11cr and the number is only growing, still we are the least penetrated market in terms of DEMAT accounts (7%) as compared to global peers like China who are at 15% and USA 65%. Last year, when the biggest of the global indices were in the red, Indian markets remained flat. Foreign investor sell offs were to the tune of 33bn dollars i.e., almost 10% of total India’s market cap. One of the speakers also mentioned that if this would’ve happened 5 years back, the Indian markets would’ve collapsed, but do you know who held it? Us, the 11cr investors. There was only one reason for this, growing investor participation which was because of increasing investor sentiment, increasing investor confidence, digitisation, formalization and most importantly, increasing literacy. Indians have started believing that compounding is the 8^th wonder of the world. India’s weight in the MSCI index has increased from 8.3% in 2020 to 14.45%, which means that out of the 100rs a foreign investor invested in 2020, only 8.3rs was invested in India, just in 2 years it has increased to 14.45rs which is a 2-year CAGR of 32%.

Environmentally, India has the lowest per capita consumption of energy which fits the sustainability criteria, too. Overall, Indian economy and Indian markets seem to be on the cusp of a boom!!

Globally:

The blue-eyed economy, the US is struggling on lot of metrics. Never has it happened in history that the US inflation rate (6.5%) was comparable to India’s inflation rate (6.7%). Non-financial debt to GDP ratio of 275%, highest ever US total debt to GDP ratio in history, there is a growing sentiment of de-dollarization, NASDAQ is down 35% from its highs. The story is no different for EU, actually they are worse.

The West is struggling from a severe energy crisis, to give some context, Americans and Europeans have the highest per capita energy consumption. Russia and Ukraine have become un-investable, so is the case with China because of its internal issues and aggressive government intervention and regulation. Moving more towards South East Asia, Sri Lanka and Pakistan are going through a severe crisis on all fronts, Bangladesh is struggling with leverage. We are not saying that only India will outperform, but Brazil, Mexico and few other names will, too.

Whatever we have written and expressed are not our words, but the best of people in the industry are saying and we are of the same opinion.

There are of course underlying risks to the above views, but one of the biggest risks would be of not being invested in India.