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Should You Buy India ETFs after Modi's Re-Election?

Neena Mishra
  • (1:00) - Elections In India: Narendra Modi and B.J.P.

  • (6:40) - What Can We Expect From The 2nd Term With Modi?

  • (12:45) - Economic Growth: China Over Takes India 

  • (16:20) - Regulation Concerns For U.S. Tech Giants

  • (20:10) - Impact of India’s Loss of Preferential Access To U.S. Markets

  • (24:00) - Will India’s ETF Outperformance Continue?

  • (32:15) - Wisdom Tree India ETFs Overviews: EPI & IXSE

  • (35:50) - Episode Roundup: Podcast@Zacks.com

In this episode of ETF Spotlight, I speak with Gaurav Sinha, Associate Director at WisdomTree. We talk about investing in India after Narendra Modi’s re-election.

Modi led his party to a landslide victory in the world’s largest election with close to 900 million eligible voters. The BJP won 303 of India’s 543 parliamentary seats, 21 more than it did in 2014.

We first take a look at Modi’s achievements in the past five years. The economy grew at an average rate of more than 7% annually. His boldest move was demonetization, which resulted in cancellation of about 86% of the currency in circulation.

Other major economic reforms included an overhaul of the tax system and implementation of a new bankruptcy law.

Should we expect some big-bang reforms during Modi’s second term?

India’s economic growth has slowed in recent months. The economy expanded 5.8% in the first quarter, and as a result, the country lost its title as the fastest growing major economy in the world.

The central bank cut its key lending rate for the third time this year as it seeks to put the economy back on track. What lies ahead?

US tech giants have been investing in India as it is very important for their global growth ambitions. Hundreds of millions of Indians have access to the internet now with cheap smartphones and data plans.

But recently the government changed e-commerce rules, which impacted Amazon AMZN and Walmart WMT owned-Flipkart. Alphabet’s Google GOOG is being investigated for abuse of its Android platform.

 Will the US tech giants face greater regulation in India now?

India ETFs have significantly outperformed the broader EM indexes over the past five years and this year as well. Mark Mobius, emerging markets guru, says India is the best EM right now.

Investors like political continuity and business-friendly reforms. Should you buy India ETFs now? Find out on the podcast.

The WisdomTree India Earnings Fund EPI holds profitable Indian companies, selected and weighted by earnings in the prior fiscal year. Reliance Industries, Housing Development Finance HDB and Infosys INFY are its top holdings.

The WisdomTree India Ex-State-Owned Enterprises Fund IXSE provides exposure to the Indian stock market while avoiding companies potentially influenced by government decisions. To learn more about these ETFs, please visit WisdomTree.

Make sure to be on the lookout for the next edition of ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Alphabet Inc. (GOOG) : Free Stock Analysis Report
HDFC Bank Limited (HDB) : Free Stock Analysis Report
Infosys Limited (INFY) : Free Stock Analysis Report
WisdomTree India Earnings Fund (EPI): ETF Research Reports
Walmart Inc. (WMT) : Free Stock Analysis Report
WisdomTree India ex-State-Owned Enterprises Fund (IXSE): ETF Research Reports
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