How to plan your investments when Indian equities are more attractive than global peers

economictimes.indiatimes.com:

The Indian stock market has been one of the best-performing markets in the world over the last 3 months. Over the last 1 year, 3 year, and 5 years, the Nifty 50 has delivered a CAGR of 21.6%, 23%, and 12.4%, respectively. This strong performance has been driven by the confluence of a number of factors.

Notably, over the last 2 years, two very significant events have transpired: India has become the 5th largest economy in the world and the fastest growing in the world. India’s population is now the youngest anywhere in the world, and China’s population has now started to age! Additionally, corporate earnings are strong and corporate India has unlevered balance sheets. Moreover, unlike their Western peers, Indian banks have the cleanest balance sheets having gone through a prolonged period of cleansing since 2014.

The recent merger of HDFC and HDFC Bank has resulted in the merged entity becoming the 4th largest in the world in terms of market capitalisation. Most importantly, perhaps in the rapid digital transformation that is underway in India. With the building blocks in place over the last 7-8 years, India’s adoption of digital technologies has now become a template for the world and India is the only country in the world that has created public digital infrastructure assets to transform society at large.

For the first time in many years, both the macro picture and the micro picture for India are extremely benign. The manner in which India has navigated through the pandemic and has been able to deliver 2 bn+ vaccines in two years has been stupendous. The manner in which India has been able to navigate through the geopolitical challenges brought about by the Russia-Ukraine war has also been very strategically done to