India: The Structural Growth Story and the Long-Term Investment Opportunity


India’s equity markets are being driven by fundamentals in the form of robust economic expansion which is leading to strong earnings growth. India is also, helpfully, in the draft of favorable geopolitical tailwinds. In this paper, we make the case for India—not as the potential new China or as potentially one of the best-performing equity markets of 2024—but for its own long-term structural growth prospects. We also explain why an active approach is needed to get the best out of India, to capture quality, navigate the challenges, and manage macro variables like inflation, interest rates and global economic growth.

It's hard to stay out of the way of India. It’s been the fastest-growing economy for the past decade and is the fifth largest globally1, behind only the U.S., China, Germany and Japan. The biggest muscle in India’s economy, we would argue, is its domestic market which is powered by a working population that represent two thirds of India’s overall population which is itself the biggest in the world.

The performance of India’s stock markets reflects its economic growth. Indian equities have been the best performing market for the past three years, and over five and 10 years they have been on the coat tails of U.S. equities. Over all three periods, India’s equity market has outperformed China and emerging markets generally, and its market capitalization is the fourth-biggest in the world1.

India is the World's Fastest Growing Economy

To understand India’s economic growth and gauge perspective on how sustainable it may be, we need to look at the forces behind it. In our view, India is being propelled by robust demand and robust supply—and at a scale that is unique among major international markets.