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Indian Elections: A Countertrend Boost for Capitalism
India's new leadership should support economic growth.
Minyanville Staff    

This article written by Debashish Bose was originally posted on the Buzz & Banter, where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

As of the time I'm writing this (early Friday morning), India's election results are almost complete, and the pro-business National Democratic Alliance (NDA) party is close to winning a decisive mandate.

As the Indian parliament has a multiparty system, it's rare for one party to win a simple majority, which leads to the formation of coalition governments. Subsequently, all kinds of vested interests among the various parties come into play.

The NDA having an overwhelming majority could really set the country up for a big leap in growth. The basic message of getting the economy revved up again resonated with voters.

I've always told investors in the US that the simplest way to imagine India is to think of what the US was about 100 years ago in terms of the kind of economic and social development that's ahead. There's a lot of low-hanging fruit in terms of basic infrastructure and construction, education, and health care, which will all go a long way in improving productivity and incomes. The NDA's manifesto talked about aggressive building of roads and rail networks -- even 100 new cities.

Political rhetoric aside, anyone who has traveled in India can easily see the massive economic multiplier effect world-class infrastructure could have. 

India currently has a GDP of about $2 trillion, which is where China was in 2000. China has grown to about $8 trillion on the back of a $23 trillion banking system. In comparison, the Indian banking system has less than $1.5 trillion in assets, which means a lot of scope for capital formation to drive real growth.

The markets have already moved up almost 25% since February 2014 and almost 60% in dollar terms since the emerging markets currency turmoil of Aug 2013, so we could see a "sell the news" reaction or some near-term consollidation.

However, I'm keeping many Indian names on my radar for buying on dips.

My list includes the following funds and ADRs:

The India Fund, Inc. (NYSE:IFN)
iShares MSCI India (BATS:INDA)
WisdomTree India Earnings Fund ETF (NYSEARCA:EPI)
ICICI Bank Ltd. (NYSE:IBN)
HDFC Bank Ltd. (NYSE:HDB)
Tata Motors Limited (NYSE:TTM)

In my opinion, India's election results represent a fundamental change, and when that happens in a continental-sized economy, you have to pay attention.

Twitter: @Minyanville

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Indian Elections: A Countertrend Boost for Capitalism
India's new leadership should support economic growth.
Minyanville Staff    

This article written by Debashish Bose was originally posted on the Buzz & Banter, where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

As of the time I'm writing this (early Friday morning), India's election results are almost complete, and the pro-business National Democratic Alliance (NDA) party is close to winning a decisive mandate.

As the Indian parliament has a multiparty system, it's rare for one party to win a simple majority, which leads to the formation of coalition governments. Subsequently, all kinds of vested interests among the various parties come into play.

The NDA having an overwhelming majority could really set the country up for a big leap in growth. The basic message of getting the economy revved up again resonated with voters.

I've always told investors in the US that the simplest way to imagine India is to think of what the US was about 100 years ago in terms of the kind of economic and social development that's ahead. There's a lot of low-hanging fruit in terms of basic infrastructure and construction, education, and health care, which will all go a long way in improving productivity and incomes. The NDA's manifesto talked about aggressive building of roads and rail networks -- even 100 new cities.

Political rhetoric aside, anyone who has traveled in India can easily see the massive economic multiplier effect world-class infrastructure could have. 

India currently has a GDP of about $2 trillion, which is where China was in 2000. China has grown to about $8 trillion on the back of a $23 trillion banking system. In comparison, the Indian banking system has less than $1.5 trillion in assets, which means a lot of scope for capital formation to drive real growth.

The markets have already moved up almost 25% since February 2014 and almost 60% in dollar terms since the emerging markets currency turmoil of Aug 2013, so we could see a "sell the news" reaction or some near-term consollidation.

However, I'm keeping many Indian names on my radar for buying on dips.

My list includes the following funds and ADRs:

The India Fund, Inc. (NYSE:IFN)
iShares MSCI India (BATS:INDA)
WisdomTree India Earnings Fund ETF (NYSEARCA:EPI)
ICICI Bank Ltd. (NYSE:IBN)
HDFC Bank Ltd. (NYSE:HDB)
Tata Motors Limited (NYSE:TTM)

In my opinion, India's election results represent a fundamental change, and when that happens in a continental-sized economy, you have to pay attention.

Twitter: @Minyanville

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

More From Minyanville Staff
Daily Recap
Indian Elections: A Countertrend Boost for Capitalism
India's new leadership should support economic growth.
Minyanville Staff    

This article written by Debashish Bose was originally posted on the Buzz & Banter, where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

As of the time I'm writing this (early Friday morning), India's election results are almost complete, and the pro-business National Democratic Alliance (NDA) party is close to winning a decisive mandate.

As the Indian parliament has a multiparty system, it's rare for one party to win a simple majority, which leads to the formation of coalition governments. Subsequently, all kinds of vested interests among the various parties come into play.

The NDA having an overwhelming majority could really set the country up for a big leap in growth. The basic message of getting the economy revved up again resonated with voters.

I've always told investors in the US that the simplest way to imagine India is to think of what the US was about 100 years ago in terms of the kind of economic and social development that's ahead. There's a lot of low-hanging fruit in terms of basic infrastructure and construction, education, and health care, which will all go a long way in improving productivity and incomes. The NDA's manifesto talked about aggressive building of roads and rail networks -- even 100 new cities.

Political rhetoric aside, anyone who has traveled in India can easily see the massive economic multiplier effect world-class infrastructure could have. 

India currently has a GDP of about $2 trillion, which is where China was in 2000. China has grown to about $8 trillion on the back of a $23 trillion banking system. In comparison, the Indian banking system has less than $1.5 trillion in assets, which means a lot of scope for capital formation to drive real growth.

The markets have already moved up almost 25% since February 2014 and almost 60% in dollar terms since the emerging markets currency turmoil of Aug 2013, so we could see a "sell the news" reaction or some near-term consollidation.

However, I'm keeping many Indian names on my radar for buying on dips.

My list includes the following funds and ADRs:

The India Fund, Inc. (NYSE:IFN)
iShares MSCI India (BATS:INDA)
WisdomTree India Earnings Fund ETF (NYSEARCA:EPI)
ICICI Bank Ltd. (NYSE:IBN)
HDFC Bank Ltd. (NYSE:HDB)
Tata Motors Limited (NYSE:TTM)

In my opinion, India's election results represent a fundamental change, and when that happens in a continental-sized economy, you have to pay attention.

Twitter: @Minyanville

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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