Is now a good time to invest?
(01.03.2013) Parameswara Krishnan, Lead Portfolio Manager for Indian Equities at DNB Asset Management, is confident about the mid- to long-term growth of India, and sees now as a good entry point for long-term investors.
With 1.2 billion inhabitants, India currently has the second-largest population in the world. In terms of economic growth, however, it only comes in at tenth place on an international ranking. In other words, India offers a lot of potential for growth.
As a result of the demographic change, the dependency ratio is changing. In India – in contrast to the USA, Germany and even China – this is sinking: employees must look after proportionally fewer old people and children. The positive consequences are apparent in the increasing savings rates and higher investment and consumption options.
Dependency ratio
Source: Morgan Stanley Research
Combined with suitable economic and political measures, major opportunities could arise – especially for investment in the Indian equity market.
Parameswara Krishnan is convinced that promising conditions are nigh. In September 2011, Krishnan accurately predicted the positive development of the Indian equity market in 2012, thus generating a 25.6% return and outperforming the benchmark index by 1.6%. According to Krishnan, the future continues to look bright.
He states that the market still offers a good entry point for investors who back the right sectors. In the past, the banking and IT sectors have fared well, although other areas that profited from urbanisation and the construction boom also contributed to the positive results. ‘Opting for the right stock in India can yield better results than investing in many other equity markets in the world.’
The only thing missing is the implementation of supportive framework conditions by the government. ‘A good economy means good politics,’ states Krishnan, placing hope on a new trend in India: the re-election of effective ministers.
Performance DNB India
January 2012 - January 2013
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